Opportunity cost of production of a commodity is ________.

the cost that the firm could have incurred when a different technique was adopted

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the cost that the firm could have incurred under a different method of production

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the actual cost incurred

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the next best alternative output

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Solution

The correct option is D the next best alternative output
Opportunity cost of production of a commodity refers to the cost which the producer has to sacrifice in terms of the next best alternative which could be produced out of that cost in order to produce every unit of the given commodity.

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Total fixed costs of a firm are Rs. 100. Its average variable cost at different levels of output is given. Calculate total cost and marginal cost at each level of output.

$\begin{matrix} Output (units) & 1 & 2 & 3 & 4 Average Variable Cost (Rs) & 60 & 56 & 60 & 64 \end{matrix}$

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$\begin{matrix} Output (units) & 1 & 2 & 3 & 4 Total Variable Cost (Rs) & 20 & 38 & 60 & 86 \end{matrix}$

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Opportunity cost of production of a commodity is ________.

The correct option is D the next best alternative outputOpportunity cost of production of a commodity refers to the cost which the producer has to sacrifice in terms of the next best alternative which could be produced out of that cost in order to produce every unit of the given commodity.

The correct option is D the next best alternative output
Opportunity cost of production of a commodity refers to the cost which the producer has to sacrifice in terms of the next best alternative which could be produced out of that cost in order to produce every unit of the given commodity.