The firm can calculate all points on its total cost curve if it knows
A)its production function.
B)the prices of inputs and of output.
C)its average cost at its optimal output level.
D)the prices of inputs and its production function.

Question

Quizplus · Accepted Answer

To calculate the total cost curve, the firm needs to know its production function which shows the relationship between inputs and outputs, and the prices of inputs which are used in production. Therefore, D is the correct choice as it includes both the production function and the prices of inputs. The prices of outputs are not necessary to calculate the cost curve. Average cost at the optimal output level would only provide information about a specific point on the cost curve, not the entire curve.

The Firm Can Calculate All Points on Its Total Cost