Functions in Economics Part II

1. Functions in Economics Contd…
4) Total Cost Function (C):
Suppose a firm produces a quantity x of a certain good.
Total cost (C) = fixed cost + variable cost.
Thus C = a + bx, C = a𝑥2
+ 𝑏𝑥 + 𝑐 etc.
5) Profit function (P):
If R is the total revenue function and C is the total cost
of production for good x.
Then Profit P = R – C.

2. • Break-Even point:
The point at which profit is zero, is
called break-even point.
We know that Profit function is given by
P = R – C, where ‘R’ is the total Revenue function and ‘C’
is the total cost function.
Thus at the Break even point P = 0
i.e. R - C = 0
i.e. R = C.
Thus break-even point is also defined as the point
where total revenue is equal to the total cost of production.

3. THANK YOU