The document discusses various concepts related to cost analysis and estimation including: 1. It defines different types of costs such as historical costs, replacement costs, opportunity costs, explicit and implicit costs, incremental costs, sunk costs, fixed costs, and variable costs. 2. It explains short-run and long-run costs and how cost curves like total cost, average cost, and marginal cost change in the short-run and long-run. 3. It discusses economies of scale and how long-run average costs are U-shaped, initially falling with scale due to product, plant and firm level economies of scale, before rising again due to diseconomies of scale.

1. ` Cost Analysis and Estimation

7. Short Run Cost Graphs AFC Q Q 1. 2. AVC 3. Q AFC AVC ATC MC MC intersects lowest point of AVC and lowest point of ATC. When MC < AVC, AVC declines When MC > AVC, AVC rises

15. Long Run Cost Function (LAC) Envelope of SAC curves

17. Long-run Average Costs