This curve cuts the vertical axis at a point above the origin and rises continuously from left to right. Research Cost Research costs are incurred to discover a new product or to improve an existing product, method, or process.
In order to simplify the cost analysis, certain assumptions are made. Expired Cost When the cost is fully consumed and no future monetary value could be measured, it is called expired cost. All these expenses are incremental costs. The dotted portions of these SAC curves are of no consideration during the long run because the firm would change the scale of plant rather than operate on them.
What is the optimum level of operation of any firm at optimum level the cost of the firm is generally reaches its minimum level? When an increase in the production of one product results in an increase in the output of another product, such products are joint products and their costs are joint costs.
Cost of production provides the floor to pricing. They are also called imputed costs.
When an industry expands, the increase in the demand for factors like labour, capital, equipment, raw materials, power, etc. This activity of production goes beyond manufacturing i. For example, when gas is produced from coal, coke and other products also emerge automatically.
Managerial Costs: In modern firms, for each plant there is a corresponding managerial set-up for its smooth operation. A firm or business combines inputs of labor, capital, land, and raw or finished component materials to produce outputs.