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PRODUCTION COST - Coggle Diagram
PRODUCTION COST
Mathematical function that defines the maximum amount of output that can be produced with a given set of inputs.
Q=F(K,L)
where:
Q is the level of output.
K is the quantity of capital input.
L is the quantity of labor input.
SHORT RUN–
Period of time where some factors of production (inputs) are fixed and constrain a manager’s decisions.
LONG RUN
Period of time over which all factors of production (inputs) are variable and can be adjusted by a manager.
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