Definition of Cost

COST is the sacrifice of a manufacturer to produce the output, using economic principles. Costs incurred to finance the inputs used. These costs are related to the cost of raw materials and auxiliary materials, land rent, interest of capital, labor costs and others. Even the sacrifices given by the community could be considered a cost. Here are some terms that need to be known
   Costs can be separated into internal costs and external costs. Internal costs are costs borne by manufacturers, such as the costs to buy raw materials paid labor. It is clear that this is the sacrifices made by the manufacturer to pay for inputs in order to produce output. As with the external costs. This fee is part of the cost to produce the output as well, but the bear is out of hand, or rather is the community. Often these costs are also called social costs. An example is the cost due to pollution.In any production process there usually is almost always a byproduct in the form of pollution. This pollution can not be avoided, meaning that the resulting product can not be obtained except by the emergence of such pollution. Though suffering from the pollution is the community. Because air pollution, lung, impaired community members. To restore to health as they are necessary costs. Companies usually do not bear these costs.The government can tackle this problem by issuing regulations on pollution that can be tolerated. If this rule exists, then the manufacturer will purchase equipment that can reduce pollution levels. If this happens, then the cost of all representing the external costs become internal costs.There are other cost terms are quite basic in economics that need to be introduced here. His name is opportunity cost. This term implies a benefit that is lost because someone chooses an activity. Each use has a variety of alternative uses of resources that provide benefits. A plot of land can be planted with rice, soy or other. Some money also has a variety of alternative uses, such as savings at home, deposited in a bank, used to finance the construction of buildings, or other.Tarohlah that a person has as many as two hundred million dollars of savings. If a person decides to save money in the cupboard, then he loses the opportunity to obtain payment for services if he kept the money in the bank. If he saved his money at home, he lost the opportunity to use the money for other purposes. It is said that the opportunity cost of saving money in the cupboard that is the loss of opportunities to obtain services save money in the bank.The person is not wrong with saving money in the cupboard, because its use is easier than if the money is deposited in the bank. Each person has their own considerations, because they have interests that differ from each other.The term opportunity cost is sometimes translated as opportunity costs, alternative costs and perimbalan. This term has been discussed in the introductory chapter
 In this chapter, the discussion will be separated into a discussion of conventional costs and expenses in decision making. The discussion concerning the cost of conventional cost-based micro-economic theory, which is separated into two parts, namely the cost of short-term and long-term costs.
                     Short-term
       In the discussion of production in the previous chapter, has discussed the so-called short-term operations and long-term operation. The production function is said to be short term if the production function contains a fixed input. Instead of the production function is said to be long-term if the input contains no fixed again. As a consequence of these properties then arises the short-run cost function and long-term cost function, so there is also the term fixed costs and variable costs.If a producer in agriculture for example, will produce, then he would use agricultural land. In a certain period of time he could not add to their land. Input this land become fixed inputs. Though this land has been leased, which means that have led manufacturers to pay, whether the farmer is producing or not producing. If the land belongs to itself, at least has an opportunity cost of land.If the manufacturer operates a short-term, to increase its output level was just how to add the input variables. The greater the level of output to be generated, then the greater the variable costs that must be removed. Rental costs (and also the cost of purchasing a certain number of seeds that are not added again) that have been issued, had no effect on the high and low levels of output.
          The cost producers, although producers do not operate so-called fixed costs Total (Total Fixed Cost). Medium size cost solely depends on the level of output is called the total variable costs (Total Variable Cost). The overall cost should come out to generate the output referred to the total cost (Total Cost, TC). From this understanding emerges, the so-called average fixed cost, average variable cost and average total cost. Average properties are associated with the level of output. So the average fixed cost (Average Fixed Cost) is the total fixed cost divided by output (AFC = TFC / Q). As for understanding the average cost of living adjust the other. The average total cost is total cost per unit of output (ATC = TC / Q), the total cost of the average variable is total variable cost divided by the number of output, or total variable cost per unit of output (AVC = TVC / Q)Another important term to know is the marginal cost (marginal cost, MC). Understanding this term is the additional cost to add one unit of output. Some call it a surcharge, because it is an additional cost that must be spent merely to add one unit of output. There is also a call to the cost limit, because this is not the total cost, but limited to adding one unit of output. So the marginal cost is (TC  /  Q) or (TVC  /  Q)In the sense of differential mathematics, Marginal Cost is the d (TC) / dQ. or also considered as d (TVC) / dQ, as a result pendiferensialan TC and TVC is the same. How the shape of the graph TC, TVC and TFC? See the following graph (Fig .....)