Explain the theory of cost and production?

Explain the theory of cost and production?

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Answers (3)

Gaby
6 months ago
Theory of Production and Cost. In
economics, the theory of production
and cost states that the cost of a
product is determined by the sum total
of the cost of all the resources that
went into making it. There are multiple
factors to be considered when
determining the cost of a product.
Theory of Production and Cost
In economics, the theory of production and cost states that the
cost of a product is determined by the sum total of the cost of all
the resources that went into making it. There are multiple factors
to be considered when determining the cost of a product. The
various theories and types of costs that come under this topic are
given as follows. Let’s study them in a more detailed manner.
Bassey
3 months ago
Theory of production: involves some of the most fundamental principles of economics. It is an effort to explain the principle, by which a business firm decides how much of each commodity that it sells,it will produce and how much of labour, raw material, fixed capital good, etc., it will use.
This also includes the relationship between the prices of commodities and the wages or rents of the productive factors used to produce them. On the one hand, it explains the relationship between the prices of commodities and productive factors, on the other, the quantities of these commodities and productive factors that are produced or used.

Theory of Cost is directly related to production theory, they are often used together.The query is usually how much to produce, incontrast to which inputs to use. That is, how much should we produce in order to minimize costs and to maximize profits.
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