Scribd Logo
Upload

Welcome to Scribd!

  • 6 views

    Lesson-6 Cost Zenia

    Uploaded by

    zeniashaheen2007
    The document defines different types of costs including explicit costs, implicit costs, and opportunity costs. It explains that explicit costs involve actual money payments for inputs while implicit costs are the imputed value of self-supplied factors. The document also discusses short run costs including total costs, total fixed costs, and total variable costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content

    You might also like

    Lesson-6 Cost Zenia

    Uploaded by

    zeniashaheen2007
    6 views10 pages
    The document defines different types of costs including explicit costs, implicit costs, and opportunity costs. It explains that explicit costs involve actual money payments for inputs while implicit costs are the imputed value of self-supplied factors. The document also discusses short run costs including total costs, total fixed costs, and total variable costs.

    Original Description:

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document defines different types of costs including explicit costs, implicit costs, and opportunity costs. It explains that explicit costs involve actual money payments for inputs while implicit costs are the imputed value of self-supplied factors. The document also discusses short run costs including total costs, total fixed costs, and total variable costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    6 views10 pages

    Lesson-6 Cost Zenia

    Uploaded by

    zeniashaheen2007
    The document defines different types of costs including explicit costs, implicit costs, and opportunity costs. It explains that explicit costs involve actual money payments for inputs while implicit costs are the imputed value of self-supplied factors. The document also discusses short run costs including total costs, total fixed costs, and total variable costs.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pdf or txt
    of 10

    COST

    By: Zenia Shaheen


    Class: 11-A
    Rollno:09
    MEANING OF COST

    • Cost is the total expenditure incurred in


    producing a commodity.
    • In Economics, Cost is the sum total of :
    1) Explicit Cost
    2) Implicit Cost
    EXPLICIT COST VS IMPLICIT COST

    EXPLICIT COST IMPLICIT COST

    • It is the payment made to outsiders for • It is the cost of self supplied factors.
    hiring factor services. • It involves imputed value of factors
    • It involves actual money payment on owned by the firm. There is no money
    buying and hiring inputs payment involved.
    • For example: Payment of wages, • For example: Interest on capital, Rent
    Rent, Insurance Premium, etc. of own land, etc.
    OPPORTUNITY COST

    • Opportunity Cost is cost of the next best alternative foregone.


    • The concept of opportunity cost is very important as it forms the
    basis of the concept of cost. When a firm decides to produce a
    particular commodity, then it always considers the value of the
    alternative commodity which is not produced. The value of the
    alternative commodity is the opportunity cost of the good that the
    firm is now producing.
    For Example: A farmer can produce either 50 quintals of rice or 40
    quintals of rice of wheat on his land with the given resources. If he
    chooses to produce rice, then he will have to forego the opportunity of
    producing 40 quintals of wheat
    SHORT RUN COSTS

    • TOTAL COST:
    • TC is the sum total of fixed cost and variable cost corresponding to a given level of
    output.
    • TC= TFC + TVC
    • Here, TFC= Total Fixed Cost
    • TVC= Total Variable Cost
    • TC= Total Cost
    TOTAL FIXED COST (TFC)

    • TFC are the costs that are incurred on fixed factor inputs and do not vary with the
    output.
    • E.g. Rent of factory, Interest on bonds.
    • TFC = Quantities of the fixed productive services * Factor Price
    • Or TFC= TC-TVC
    TOTAL VARIABLE COST (TVC)

    • The costs that are incurred on variable factor inputs and vary directly with the
    output are called variable costs.
    • E.g. Raw material, Fuel, Electric power.
    • TVC= Quantities of the variable productive service * Factor Price.
    • Or TVC=TC-TFC
    PROBLEM SOLVING

    You might also like