Page 1 - HA-COST

SAI INTERNATIONAL SCHOOL

ECONOMICS

Class-XI

[MICRO ECONOMICS]

CHAPTER -6

COST

(Module-40)

TOPIC-

 Meaning of cost
 Opportunity cost

 Explicit cost & Implicit cost
 Short run costs

Relation among short run costs(TFC ,TVC &TC)

SHORT NOTES:

 COST- refers to the expenditure incurred by a producers on the factors as
well as non-factor input for a given amount of a commodities

 COST FUNCTION- The functional relationship between cost & the
output is known as cost function. C = f (O)

 TYPES OF COST:

1. Opportunity cost:The cost of producing one unit of commodity X
is the amount of commodity Y that must be sacrificed in order to
use resources to produce X rather Y.

OR
Cost of the next best alternative forgone.

For eg. A farmer can produce either wheat (100 quintals.) or rice (50

Quintals) with the given resources. If he chooses to produce wheat