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cost function
[cost function|cost function] is the function whose derivative gives the marginal cost.
Definition
cost function is the function whose derivative gives the marginal cost. The marginal profit is derived from the cost function and revenue function.
Mechanism
cost function is a mathematical function that quantifies the total cost of production for a company. In the case of a cell phone manufacturer, the cost function C = x^2 - 1200x + 36,400 represents the relationship between the number of cell phones produced (x) and the total production cost (C) in dollars.
Effects
cost function [cost function] affects the interpretation of results through substituting h=1, leading to an approximation of MC(x) as C'(x) and C(x+1)-C(x).