Define cost function.

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Q. Define cost function.

Tamil Nadu DgeTamil Nadu HSC First Year (DGE) Commerce Board 2026Subjective· 2mImportance★★★★★

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A cost function shows how a firm's cost of production depends on its level of output: C = f(Q).

A cost function states the relationship between the cost of production (C) and the level of output (Q), other things (such as factor prices and technology) remaining constant. It is written as:

C = f(Q)

meaning cost is a function of the quantity produced. As output rises, total cost also changes in a manner determined by the firm's production conditions. Cost functions are of two types corresponding to the two time periods:

Short-run cost function — some factors are fixed, so cost includes both fixed and variable costs. …

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CBSE 2025Set MARCH1 markMCQ
$Q. The cost incurred by producing one more unit of output is ______ cost.$
(a) marginal
(b) variable
(c) total
(d) fixed
›Reveal solutionSolution
The cost of producing one additional unit of output is called Marginal Cost, so the answer is option (a).

Marginal Cost (MC) is the addition to total cost caused by producing one more unit of output:

Marginal Cost = Change in Total Cost / Change in Output = (TCn − TCn-1)

It reflects only the change brought about by the last unit produced. In contrast:

Fixed cost does not change with output.

Variable cost changes with output but is the total (not per extra unit) variable expense. …
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CBSE 2024Set MARCH1 markMCQ
$Q. If total fixed cost (TFC) is 1,000 and total variable cost (TVC) is 200, then find the total cost :$
(a) 500
(b) 800
(c) 20,000
(d) 1,200
›Reveal solutionSolution

The correct option is (d) 1,200: TC = TFC + TVC = 1,000 + 200 = 1,200.

In the short run a firm's total cost (TC) is the sum of two parts: total fixed cost (TFC), which does not change with output, and total variable cost (TVC), which changes with output. The relationship is TC = TFC + TVC.

Substituting the given figures:

TC = 1,000 + 200 = 1,200.

…

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CBSE 2022Set MARCH1 markMCQ
$Q. The cost incurred by producing one more unit of output is ________ cost.$
(a) marginal
(b) variable
(c) total
(d) fixed
›Reveal solutionSolution

The cost of producing one more unit of output is marginal cost.

Marginal cost (MC) is defined as the addition made to total cost when output is increased by one unit: MC = change in TC / change in Q. Variable cost changes with output but refers to the total of all variable inputs, not the cost of a single extra unit. Total cost is the sum of fixed and varia …

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CBSE 2022Set MARCH1 markMCQ
$Q. Identify the formula of estimating average cost.$
(a) TVC/Q
(b) AVC/Q
(c) AFC/Q
(d) TC/Q
›Reveal solutionSolution

Average cost = Total Cost / Quantity, i.e. TC/Q.

Average cost (AC), also called average total cost, is the cost per unit of output. It is calculated by dividing the total cost by the number of units produced: AC = TC / Q. It can also be seen as the sum of average fixed cost (AFC = TFC/Q) and average variable …

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←Previous questionQ23 — Long-run average cost curve is also called as ___ curve. (a) demand (b…→Next questionQ25 — Write a short note on Marginal Revenue.

Q.Define cost function.

Concept understanding — Short-Run Cost Curves – TFC, TVC, TC, AFC, AVC, ATC and MC

Q.Define cost function.

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