class 12 microeconomics production cost notes
Production Cost ....... ...short and easy notes for board exam. 1. What do you mean by production cost? > The expenditure made on factor of production to produce final product is called cost of production. C = f(O) 2. What do you mean by money cost? > Cost of production measure in term of money is called money cost. Money cost is the monetary expenditure on factors of production. Following item included in money cost; Expenditure on raw material. Wages and salaries. Expenditure on indivisible big machines. Interest paid on capital. Rent, i.e., payment to land/building owner. Depreciation. Management expenses. Advertisement expenses. Transportation expenses. Payment made to insurance companies. Normal profit. Fuel expenses. Money cost = explicit cost + implicit cost + normal profit 3. What do you mean by explicit cost? > Cash paid to outsider by the firm for their services and goods, is called explicit cost. Following items are included in explicit cost; Expenditure on r...