Behavior of costs - level of output produced Hence the...

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Behavior of costs: Cost of production is a function of the volume of output produced . Total cost is made up of two components. Some of the inputs are fixed and indivisible. Their aggregate cost remains constant and hence goes on falling in an average proportion as output increases. Other factors of production are variable and go on increasing with the
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Unformatted text preview: level of output produced. Hence the variable cost of production continuously increases but in different proportions. The behavior of the total cost of production is a mixture of these two influences. Like the law of returns there are similar laws for cost behavior....
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