What is a short -term cost function?

The short -term cost function represents a number of estimates of the total cost of the production of different production levels in a given scenario. These types of estimates can provide insight to the theoretical level of production for only one product or for a range of products. The short -term cost function includes various variables affecting the overall estimated output.

Generally, the function of short -term cost is to consider what happens if it increases or reduces production in their devices. Many of these features are represented on the X and Y axes, where the business leader can visually see how the costs increase with increasing production. It is unusual that the costs are reduced with an increase in production, and therefore many of these graphs include a specific type of line contour that proceeds and to the right of the original zero axis in the center of the graph.

Unlike another type of estimation called long -term costs, a short RUN The cost function includes some limitation of changes in variables. Some experts explain this in this wayem; In the short term, things such as equipment capacity and plant size cannot be changed. This makes the short -term cost function specific and more limited than long -term costs, which may include multiple changes in variables. The short -term run function "assumes" certain things that society cannot change without extensive contracts and initiative.

Some variables are the actual function of short -term costs. These include work organizations and other similar factors. These variables will affect the function of short -term costs as presented.

In addition to providing a company management or a company of more specific ideas about production costs, the function of short -term costs can also lead to a greater analysis of net income. Where production analysis is only one piece of Great HORD design, short or long -term costs or comparison of both can be very valuable for more complex equations. Many of these functionsIt is represented by collecting data on software to support decision -making or other types of technologies, where computers help people to take comprehensive decisions on production, advertising, work organization or any other aspect of ongoing business operations.