I see three types of cost functions:
- $C(q) = 4q$ where $q$ is the quantity
- $C(w_1, w_2 ,q) = w_1w_2q$ where $w_1, w_2$ are the rental rates and $q$ is the quantity of the product
- $C(\mathbf{w}, \mathbf{x}) = \mathbf{w} \cdot \mathbf{x}$ where $\mathbf{w}$ is the price vector and $\mathbf{x}$ denotes the input factors
Can anyone tell me what each of these mean? The second one is probably called the conditional cost function and the third one comes from the definition of cost. What's the first one? I have seen it being used in perfect competition and monopoly for instance, but what's the difference between 1 and 2 then? We can also use (2) in perfect competition and monopoly I think, or can we not? I am confused.
Edit: I think (1) and (2) are the same. They both are probably conditional cost functions. (2) probably considers the prices as values (with the assumption that prices aren't changing). (3) is the generic definition or the unconditional cost function. When optimized to produce quantity $q$, (3) produces (1) and (2).