Determinants of cost

• Cost follow the law of diminishing return: The cost will shows a tendency to rise, reverse case when the law of increasing returns operates;
• Bigger the size of the firm/plant, fixed cost higher in the beginning, variable cost tends to lower in comparison to small size plant;
• Cost curve in short-period rise steeply than long-run cost curve;
• Higher capacity utilization of the plant, lower is the fixed cost/unit output;
• Most technological innovations, if used, makes low cost;
• Efficiency of using inputs and choice of relatively cheaper inputs;
• When output stable, cost low