5 Questions
What is the most desirable rate of output and how is it related to total profit?
The most desirable rate of output is the one that maximizes total profit, which is the difference between total revenue and total cost.
Explain the concept of production function and its relationship to prices and costs.
A production function tells us how much output a firm can produce with its existing plant and equipment. The level of output depends on prices and costs.
What are the input factors that entrepreneurs pay for, and how are they included in the cost of production?
Entrepreneurs pay for input factors such as wages for labor, price for raw material, rent for building hired, and interest for borrowed money. All these costs are included in the cost of production.
How does the economist's concept of cost of production differ from accounting?
The economist’s concept of cost of production is different from accounting, and this chapter helps to understand the basic cost concepts and the cost output relationship in the short and long runs.
What are the major cost determinants affecting the cost of production of goods and services?
The major cost determinants are the level of output, price of input factors, productivities of factors of production, and the level of technology and innovation.
Test your knowledge of the fundamental principles of economics including supply and demand, market equilibrium, and the role of government in the economy with this comprehensive quiz.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
