Which of the following is not a determinant of the firm's cost functions?

The production function

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The price of labour

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Taxes

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The price of the firm's output

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Solution

The correct option is D The price of the firm's output
The cost function of the firm will only include the price of inputs that the firm employs, this includes wages paid to labor, (machinery) capital investments etc. The price of a firms output is not a direct or indirect cost incurred by the producer and thus it will not be included in the production function.

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Which of the following forms of the market has few firms and each firm pursues its price and output policy independent of the rival firms?

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