The function that associates the cost of the least-cost input combination, when all input levels are variable, with each possible level of output is called the
A) long-run cost function
B) long-run production function
C) increasing returns to scale function

Question

Quizplus · Accepted Answer

The function that describes the cost of the least-cost input combination for all levels of output is called the long-run cost function. This function is useful for making production decisions in the long run, where all input levels can be varied to produce the most efficient output at the lowest cost possible. The long-run production function, on the other hand, describes the maximum output that can be produced using all inputs efficiently in the long run. The increasing returns to scale function describes the rate of increase in output as all inputs are increased by a certain proportion.

The Function That Associates the Cost of the Least-Cost Input