The document analyzes different dimensions of cost including total cost, fixed cost, variable cost, marginal cost, and average cost. It discusses why economists need to analyze costs, defining costs as the price of inputs and including a normal profit. Costs are broken down into total, fixed, variable components and the relationships between them are examined graphically to determine optimal production levels.

1. Analysis of Cost

5. Raw Material Labor Capital Combination of Inputs OUT PUT Product Marketing Land REVENUEProfit First Combination Price Of The Inputs Is Cost

6. Raw Material Labour Capital Combination of Inputs OUT PUT Product Marketing Land REVENUEProfit Second Combination

7. Raw Material Labour Capital Combination of Inputs OUT PUT Product Marketing Land REVENUEProfit Third Combination

11. Calculation of optimal Level 53.13 6.88 60.00 110 480 425 55 8 45.00 7.86 52.86 90 370 315 55 7 37.50 9.17 46.67 70 280 225 55 6 31.00 11.00 42.00 50 210 155 55 5 26.25 13.75 40.00 30 160 105 55 4 25.00 18.33 43.33 20 130 75 55 3 27.50 27.50 55.00 25 110 55 55 2 30.00 55.00 85.00 30 85 30 55 1 infinite infinite infinite infinite 55 0 55 0 AVC AFC AC MC TC=FC+VC VC FC Quantity

12. Graphical Representation of optimal Level