Revision Notes For Class 12 Economics Microeconomics Chapter 3 Production And Costs

Production And Costs is the chapter that explains about the pricing structure for a commodity. This chapter is incorporated with various topics – production, production function, total product (TP), marginal product (MP), average product (AP), short run, long run, law of diminishing marginal product, law of variable proportion, returns to scale, cost function, production cost, explicit cost, implicit cost, total cost, total fixed cost, total variable cost, average cost, average variable cost, marginal cost, shape of curves.

Frequently asked Questions on CBSE Class 12 Microeconomics Notes Chapter 3: Production and Costs


What is ‘Implicit cost’?

An implicit cost is any cost that has already occurred but not necessarily shown or reported as a separate expense.


What is ‘Cost function’?

The cost function measures the minimum cost of producing a given level of output for some fixed factor prices.


What is ‘Marginal product’?

The marginal product of an input, say labour, is defined as the extra output that results from adding one unit of the input to the existing combination of productive factors.


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