ABSTRACT
In the real world the single producer is unable to switch at no costs from one industry to another and fine-tune his input and output combinations accordingly. The producer will probably also frequently reassess his technical choice in order to ensure that his past decisions are still correct. For example, an increase in the price of labour relative to that of equipment might prompt a reduction in the use of labour and the adoption of a more machinery-intensive mix. Put differently, since total-cost curves usually exclude the cost of acquiring information, the presence of an efficiency gap the difference between actual costs and the minimum costs that could be obtained by a perfectly informed and rational agent could actually hide the fact that a producer is simply saving on substantial information costs. The last analytical tool typical of cost theorising is marginal cost, which refers to the variation in total cost when production changes.
