Cost Function- Graphical

Presentation
By

Dr. Gurendra Nath Bhardwaj

Associate Professor

NIIT University
Neemrana, Rajasthan
Email:
gurendra.bhardwaj@niituniversity.in

Straight Cost Function

Q
0
10
20
30
40
50
60
70
80
90
100
110

a
100
100
100
100
100
100
100
100
100
100
100
100

TC= a+bQ
b
TC
0
100
2
120
2
140
2
160
2
180
2
200
2
220
2
240
2
260
2
280
2
300
2
320

MC
NA
2
2
2
2
2
2
2
2
2
2
2

AC
NA
12
7
5
5
4
4
3
3
3
3
3

TC
350

300

250

200
Axis Title
150

100

50

0
1

10

11

MC
2.5

1.5

Axis Title
1

0.5

0
1

10

AC
14

12

10

8
Axis Title
6

0
1

10

11

Quadratic

TC= a+bQ+CQ2

Q
0
10
20
30
40
50
60
70
80
90
100
110

A
100
100
100
100
100
100
100
100
100
100
100
100

C
0
2
2
2
2
2
2
2
2
2
2
2

TC
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1
0.1

100
130
180
250
340
450
580
730
900
1090
1300
1530

b+2 (a/Q
cQ
)
+b+
cQ
MC
NA
3
5
7
9
11
13
15
17
19
21
23

AC
NA
13
9
8
8.5
9
10
10
11
12
13
14

based on
differential
calculus)

4
13
6
9
8
8
10
8.5
12
9
14
10
16
10
18
11
20
12
22
13
24
14

TC
1800

1600

1400

1200

1000
Axis Title
800

600

400

200

0
1

10

11

12

AC
16

14

12

10

Axis Title

0
1

10

11

MC
30

25

20

Axis Title

15

10

0
1

10

11

Cubic Cost Function

TC= a+bQ+CQ2+dQ3
Q

TC

b2cQ+3dQ2
MC

AC

(a/Q)+bcQ+dQ2

based on differenital
calculs)
NA

100

0.1

100

NA

10

100

0.1

0.05

160

16

15

16

20

100

0.1

0.05

500

34

25

58

25

30

100

0.1

0.05 1420

92

47

131

47

40

100

0.1

0.05 3220

180

81

234

81

50

100

0.1

0.05 6200

298

124

367

124

60

100

0.1

0.05 10660

446

178

530

178

70

100

0.1

0.05 16900

624

241

723

241

80

100

0.1

0.05 25220

832

315

946

315

90

100

0.1

0.05 35920 1070

399

1199

399

100

100

0.1

0.05 49300 1338

493

1482

493

110

100

0.1

0.05 65660 1636

597

1795

597

MC
2000
1800
1600
1400
1200
1000
800
600
400
200
0
1

10

11

AC
700
600
500
400
Axis Title
300
200
100
0
1

10

11

TC
70000
60000
50000
40000
30000
20000
10000
0
1

10

11

12

Optimum Output

TC= a+bQ+CQ2
Q

A
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

b
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50

C
0
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2
2

TC
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5
0.5

MC
50
52.5
56
60.5
66
72.5
80
88.5
98
108.5
120
132.5
146
160.5
176
192.5
210
228.5
248
268.5
290

b+2 (a/Q)
cQ +b+cQ
AC
NA
2.5
3.5
4.5
5.5
6.5
7.5
8.5
9.5
10.5
11.5
12.5
13.5
14.5
15.5
16.5
17.5
18.5
19.5
20.5
21.5

NA
53
28
20
17
15
13
13
12
12
12
12
12
12
13
13
13
13
14
14
15

3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22

53
28
20
17
15
13
13
12
12
12
12
12
12
13
13
13
13
14
14
15

AC & MC
60

50

40

Axis Title

30

20

10

0
1

10

11

12

13

14

15

16

17

18

19

20

TC= a+bQ+CQ2+dQ3

b(a/Q)
2cQ+ +b3dQ2 = cQ+d
MC
Q2
= AC

A
0
1
2
3
4
5
6
7
8
9
10
11

b
50
50
50
50
50
50
50
50
50
50
50
50

C
10
10
10
10
10
10
10
10
10
10
10
10

d
1
1
1
1
1
1
1
1
1
1
1
1

TC
0.1
50
0.1 59.1
0.1 66.8
0.1 73.7
0.1 80.4
0.1 87.5
0.1 95.6
0.1 105.3
0.1 117.2
0.1 131.9
0.1 150
0.1 172.1

MC
NA
9.1
7.7
6.9
6.7
7.1
8.1
9.7
11.9
14.7
18.1
22.1

AC

based on differential
calculus)
NA

59.1
8.3
59.1
33.4
7.2
33.4
25
6.7
24.6
20
6.8
20.1
17.5
7.5
17.5
16
8.8
15.9
15
10.7
15.0
15
13.2
14.7
15
16.3
14.7
15
20
15.0
16
24.3
15.6

TC
200

180

160

140

120

100

80

60

40

20

0
1

10

11

12

MC
30

25

20

Axis Title

15

10

0
1

10

11

AC
70.0

60.0

50.0

40.0

Axis Title
30.0

20.0

10.0

0.0
1

10

11