Explore topic-wise InterviewSolutions in Current Affairs.

(b) AFC Curve

The amount spent in terms of money for the production of commodity is called money cost.

Correct answer is (c) TFC

Average Cost (AC) = Total Cost (TC)/Output (Q)

The utility of LAC curve lies in its ability to assist the firm in the determination of the best size of the plant to be adopted for producing the given output. For outputs less than the low-cost combination at the optimum scale, that is, when the firm is operating subject to increasing returns to scale, it is more economical to underuse a slightly larger plant operating at less than its minimum cost output than to overuse a smaller plant. Conversely, at outputs beyond the optimum level, that is, when the firm experiences decreasing returns to scale, it is more economical to overuse a slightly smaller plant than to underuse a slightly larger one.

According to Dooley, “The Average Cost of production is the Total Cost per unit of output.”

(c) AC and AR

Fixed cost refers to the expenditure incurred on the fixed factors of production. It does not change with change in output.

According to Dooley, “The average cost of production is the total cost per unit of output”. In other words, average cost of production is the total cost of production divided by the total number of units produced.

Correct answer is (b) AFC

Long-run average cost refers to the minimum possible per unit cost of producing different quantities of output in the long period.

According to Mansfield, ” The long-run average cost curve is that curve which shows the minimum cost per unit of producing each output level corresponding to different scales of productivity.” It is determined by dividing long-run Total Cost by the quantity of output produced. It is the lowest average cost attainable when all inputs are variable; that is, when any plant size can be constructed.

According to Samuelson, ” Marginal cost at any level of output is the extra cost for producing one extra unit more or less.”

According to Ferguson, “Marginal cost is the addition to total cost due to the addition of one unit of output.”

According to Richard Lipsey, ” The cost of using something in a particular venture is the benefit forgone (or opportunity cost) by not using it in its best alternative use.”

According to the Mansfield, “The long-term average cost curve is that curve which shows the minimum cost per unit of producing each output level corresponding to different scales of productivity.”

Variable cost refers to the expenditure incurred on the variable factors of production. It varies with output.

The shape of a fixed cost curve is a hyperbola, since the average fixed cost decreases with increasing scale of production.

(d) is the average fixed costs

According to Ferguson, “Long-term marginal cost is the addition to total cost attributable to an additional unit of output when all inputs are optionally adjusted.”

In real life, we go from one job to another and from one business to another. We lose the current job salary for a second job. So remuneration lost is termed as opportunity cost. Suppose a person working as a clerk for Rs. 2,000/- per month is to be appointed as a supervisor. Other things being equal, the person is to be offered higher than Rs. 2,000/- for the job of a supervisor. But at the same time, he is to sacrifice his old job of Rs. 2,000/- per month. This sacrifice of Rs. 2,000/- is his opportunity cost of working as supervisor. Thus, opportunity cost is the opportunity lost or opportunity foregone in terms of the next best alternative use of a factor.

Real cost connotes to those payments which are made to factors of production to compensate for the toil and efforts in rendering their services.

Examples of fixed cost :

1. Rent of building
2. Depreciation of Machinery.

Examples of Variable cost :

1. Expenses on Raw Material
2. Labour Wages.

1. MC and AC both can be calculated by TC.
2. When AC falls, MC also falls but AC > MC.
3. When AC rises, MC also rises but now MC > AC.
4. When AC is minimum, then MC = AC.

In other words, MC curve cuts the AC curve at its minimum point (i.e. optimum point) and moves upwards.

Raw material, fuel and power (electricity charges), wages for casual and temporary labour, transport costs, etc.

Alkynes are carbon compounds containing one or more C≡C bonds. One can generalize the formula from the examples C₂H₂, C₃H₄ etc.

According to Leftwitch, ” Explicit costs Eire those cash payments which firms make to outsiders for their services and goods.”

The actual expenditure which a firm must incur to make payments to the suppliers of resources, factors’ or services used for the production of a good is called explicit cost.

The actual money expenditure which a firm must incur to make payments in production are called explicit costs. 

Example : Expenditure on Raw Material, labour, payment of interest etc.

(b) Average total costs are falling

(d) Marginal production

Monetary Cost.

Alkynes are represented by the general formula C_nH_2n-2.

(d) Average total cost is minimized

(c) The payment of wages by the firm.

Alkenes are represented by the general formula C_nH_2n .

The relationship between Marginal Cost and Average Cost is the same as that between any other marginal-average quantities. When marginal cost is less than average cost, average cost falls and when marginal cost is greater than average cost, average cost rises. This marginal-average relationship is a matter of mathematical truism and can be easily understood by a simple example. Suppose a producer produces a commodity at an average cost of Rs.30. If cost of producing the next one unit is Rs. 10, his average cost falls to Rs.20, Now, if he produces one unit more and his average cost falls, it means that the additional unit must have cost him less than Rs. 20

Now, if he produces one unit more and his average cost rises, it means that the additional unit raises his average cost, and then the marginal unit must have cost him more than Rs. 20. Finally, if as a result of the production of an additional unit, the average cost remains the same, the marginal unit must have cost him exactly Rs. 20. That is, marginal cost and average cost would be equal in this case.

Correct answer is (d) Rs. 100

1. Unsaturated hydrocarbons those are having carbon * carbon double bond are known as alkenes. 

2. The general formula of Alkenes is CHH₂H. 

Example : Ethelene (C₂H₄).

The IUPAC name of Ethyle alcohol is Ethanol.

Correct answer is (d) Rs.420

3 – Mono chloro butene (or) 3 Chloro butene

3 – Chloro 1 – Butane

(d) Average cost of producing 5 units is Rs.60.

The difference between Total Cost and Total Variable Cost is Total Fixed Cost, which remains the same whether the output produced is 1 unit or 100 units.

Supply refers to the quantity of a commodity that a seller offers for sale at a given price, at a point of time in specific market. 

The simplest hydrocarbon is alkane called Methane (CH₄). It’s an aliphatic, saturated compound of Hydrogen and Carbon.

B) 3 – chloro butanoic acid

The difference between Average Total Cost and Average Variable Cost i.e. Average Fixed Cost decreases as production is increased.