A short-run cost function assumes that
A) the level of output is fixed.
B) at least one input is fixed in supply.
C) all inputs are fixed in supply.
D) both a and b
E) both b and c

Question

Quizplus · Accepted Answer

The short-run cost function assumes that at least one input is fixed in supply. This means that the level of output can vary, but there is a limit to the amount of input that can be used to produce that output. This is important because it means that as output increases, the marginal cost of producing that output will eventually increase due to the fixed input(s) becoming a bottleneck.

A Short-Run Cost Function Assumes That