Cost of Production

What is the difference between explicit cost and implicit cost?

• Explicit cost is the cost of inputs hired and purchased from the market, Implicit cost is the cost of inputs which are owned and supplied by the entrepreneur himself

• Explicit cost is the cost of inputs which are owned and supplied by the entrepreneur himself, Implicit cost is the cost of inputs which are owned and supplied by the entrepreneur himself

• Explicit cost is the cost of inputs which are owned and supplied by the entrepreneur himself, Implicit cost is the cost of inputs hired and purchased from the market

• Explicit cost is the cost of inputs hired and purchased from the market, Implicit cost is the cost of inputs hired and purchased from the market

What is normal profit in economics?

• The profit made by a business after covering all costs

• The minimum supply price of the entrepreneur which he must get in order to remain in the present business

• The maximum profit a business can make in a given period

• The profit made by a business without considering any costs

What are the elements of total cost in microeconomics?

• Explicit cost, Implicit cost, Normal profit

• Fixed cost, Variable cost, Normal profit

• Fixed cost, Variable cost, Opportunity cost

• Explicit cost, Implicit cost, Opportunity cost

How does average fixed cost change with an increase in output?

• It remains constant

• It fluctuates

• It rises

• It falls

What is the relationship between average variable cost (AVC) and marginal cost (MC)?

• When MC is more than AVC, AVC falls with increase in output

• When MC is more than AVC, AVC remains constant

• When MC is less than AVC, AVC falls with increase in output

• When MC is less than AVC, AVC rises with increase in output

What is the formula to calculate marginal cost (MC)?

• MC = TCN - TCN-1

• MC = TFCN - TFCN-1

• MC = TVCN - TVCN-1

• MC = TFCN + TVCN

Which cost determines marginal cost (MC)?

• Variable cost

• Fixed cost

• Explicit cost

• Total cost

How is average total cost (ATC) calculated?

• By dividing total cost by the total units of output

• By adding average fixed cost and average variable cost

• By subtracting total fixed cost from total variable cost

• By multiplying total fixed cost and total variable cost

What is the concept of social cost in economics?

• The cost incurred by a business for hiring labor and purchasing materials

• The cost to the society as a whole for producing a commodity in the form of pollution and other negative impacts

• The cost of producing a commodity without any profit

• The cost of producing a commodity without considering any external factors

How does average fixed cost (AFC) change with an increase in output?

• It fluctuates

• It remains constant

• It rises

• It falls