User:Smitashukla/smitaa shukla 3

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1. Marginal Cost is

	Change in the total cost when one more unit of the good is produced
	It is sum total of change in fixed cost and average cost
	It is obtained by dividing the total cost with the number of units produced

2. Social cost is

	Cost incurred on all individuals in society
	External Cost (Cost of loss or disutility to society on account of action/activities of a firm) plus the Private Cost of the Firm
	Accounting Cost plus Implicit Cost

3. Opportunity cost is

	The income or return involved in the next best alternative
	The actual paid out cost of a firm
	The Private Cost of a Firm

4. Fixed Cost is

	The Private Cost or paid out cost of a firm for a given level of output
	The Opportunity Cost of the firm
	The cost which a firm has to incur even if a firm is not operating

5. A Company has two Investment Options in hand. One Investment option can generate income of 1, 00, 000 and other option can genertae income of 90, 000. Company selects the option that yields return of 1, 00, 000. For the company, Opportunity Cost is

	1, 00, 000
	90, 000
	10, 000

6. A firm is currently earning profit of Rs. 10, 00, 000 from its business operations. It the company would have invested money in the next best alternative investment option then it could have earned profit of Rs. 9, 50, 000. The Economic Profit of the firm is

	50, 000
	Zero
	9, 50, 000

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True or False Quiz

• Explicit Cost is
  • Cost borne or paid out by a firm
    • True
  • Cost of loss or damage to the environment on account of activities of a firm
    • False

• External Cost is
  • Cost of loss or damage to the environment on account of activities of a firm or cost of any such facility which a firm is enjoying but is not paying for
    • True
  • It is the Opportunity Cost of a Firm
    • False

• Real Cost is
  • Monetary cost (that is paid out) of operations of a firm
    • False
  • Actual Paid Out Cost plus Implicit Cost of a Firm
    • True
    • False