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Essay / Research Paper Abstract
This five page paper explains the cost production relationship, looking at the production function and the cost function and then considering how costs may be distributed over different production levels. The paper, including one graph looks at using average fixed cost, average variable cost and average total cost in order to determine optimum production levels. The bibliography cites 3 sources.
Page Count:
5 pages (~225 words per page)
File: TS14_TEcostpr.rtf
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Unformatted sample text from the term paper:
placed into the process, inputs will be both the raw materials for the product and well as less direct costs such as the provision of the factory and facilities. The
costs can then be analysed to determine if there is a project that is worth undertaking. In general terms the aim of
a company is to add value to its production, this is undertaken in the transformation process; transforming the inputs into outputs. To undertake this a company will make use of
a range of inputs, this include land, materials, labour, plant and equipment, power and many other inputs. The way these inputs are used will determine how well they are maximised
(Heathfield and Wise, 1987). There are different models, for example some processes will be labour intensive, others will be capital intensive and the decision of which model to follow
will be the result of careful consideration of the way in which the costs are created and add value (Nellis and Parker, 2000). To understand this production cost relationship we
need first to consider the production function. The production function can be expressed as a mathematical formula Q = F(I1, I2,
I3, ....In). (Heathfield and Wise, 1987). This equation means that the quantity that is produced (also known as the output) (Q), is
determined by, meaning it is a function of (F), the different inputs (In). he different inputs may be categorised into some set inputs, such as land, labour, and capital, but
may also be more specific such as relating to the specific type of labour, or specific types of capital, there are many potential inputs that can be used in this
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