Question

In any proper cost function, is cost itself a dependent variable or an independent variable? How do you know?

Answer 1

In any proper cost function, the cost variable is which is dependent on various factors like supply of the material and transportation and storage costs. The other factors are norms of production of products through which cost of inputs varies from period to period. Thus, the incidence of the costs depends and varies depending on various factors. The costs at the various inputs are different for different period and different places and for different products, which explains us that the cost are dependent variable.

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