What is Cost?
According to the common usage, cost is the fiscal value of commodities and facilities that manufacturers and customers buy. According to the fundamental economic discern, the cost price is the estimate of the substitute opportunities bygone in the option of one commodity or pursuit over others.
Such a basic cost is normally mentioned as the opportunity cost. For customers with a constant earning (fixed income), the opportunity cost of buying a new household instrument, for instance, the value of a vacation, is not being executed.
More ordinarily, cost price has an association between the value of production inputs and the degree of output. TC (total cost) price is mentioned to be the total expenditure sustained in attaining a particular degree of output. If such TC is divided by the unit manufactured, then the aggregate or quantity cost is procured.
A part of the total cost is known as fixed cost, for example, the cost prices of machineries do not differ with the quantity manufactured, and in the short run, do not change with the changes in the unit manufactured. Variable costs, such as the costs of raw materials or labour, change with the degree of output.
A facet of cost significance in an economic analysis is the marginal cost or the addition to the total cost due to the manufacture of an additional quantity of output. An enterprise wanting to maximise its worth and profit would, in theory, decide its degree of output by continuing manufacturing until the cost price of the last additional quantity manufactured (marginal cost) is just equivalent to the addition to the revenue (marginal revenue) procured from it.
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Also Read: Sandeep Garg Solution for Chapter 6 Cost