The correct answer is A. nonlinear cost function.
A cost function is a mathematical function that describes the total cost of producing a certain quantity of goods or services. A linear cost function is a cost function that is represented by a straight line on a graph. A nonlinear cost function is a cost function that is not represented by a straight line on a graph.
There are many reasons why a cost function might be nonlinear. For example, the cost of producing a good might increase at an increasing rate as the quantity produced increases. This is because the cost of inputs, such as labor and materials, might increase as the quantity produced increases.
Another reason why a cost function might be nonlinear is that there might be economies of scale. Economies of scale occur when the cost of producing a good decreases as the quantity produced increases. This is because the fixed costs of production, such as the cost of building a factory, can be spread out over a larger number of goods.
Nonlinear cost functions can be more difficult to analyze than linear cost functions. However, they can be more realistic in many cases.
Here is a brief explanation of each option:
- A. Nonlinear cost function: A cost function that is not represented by a straight line on a graph.
- B. Linear cost function: A cost function that is represented by a straight line on a graph.
- C. Linear price function: A price function that is represented by a straight line on a graph.
- D. Nonlinear price function: A price function that is not represented by a straight line on a graph.