Question

Cost of production of the producer is given by which of the following?

• A. Sum of wages paid to labourers
• B. Sum of wages and interest paid on capital
• C. Sum of wages, interest, rent and supernormal profit
• D. Sum of wages, interest, rent and normal profit

Answer 1

The correct option is D Sum of wages, interest, rent and normal profit

The cost to the entrepreneur will include the rewards that must be paid to each factor of production. ie. Rent for employing land, wages paid to labourers, interest paid on capital and profit paid to the entrepreneur.