Overview

cost function


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A formula or equation that represents the way in which particular costs behave when plotted on a graph. For example, the most common cost function represents the total cost as the sum of the fixed costs and the variable costs in the equation y = a + bx, where y is the total cost, a is the total fixed cost, b is the variable cost per unit of production or sales, and x is the number of units produced or sold.

Subjects: Business and Management.


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