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Identify the correct pair of items from the following Columns I and II: Column I Column II (1) Opportunity Cost (a) ) The value of a factor in its next worst alternative use. (2) Explicit Cost -

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Question

Identify the correct pair of items from the following Columns I and II:

Column I Column II
(1) Opportunity Cost (a) ) The value of a factor in its next worst alternative use.
(2) Explicit Cost (b) ) The expenses incurred by the producer when the inputs are purchased or hired from the market.
(3) Implicit Cost (c) The value of a factor in its next best alternative use.
(4) Hidden Cost (d) The expenses incurred by the producer when the inputs are purchased or hired from the black market.

Options

  • 1 - (a)

  • 2 - (b)

  • 3 - (c)

  • 4 - (d)

MCQ
Match the Columns

Solution

2 - (b)

Explanation:

Opportunity Cost Cost of foregone next best alternative.
Explicit Cost Any expense that has already occurred but is not shown or reported as a separate expense.
Implicit Cost These are normal business costs that appear in the general ledger and have a direct impact on a company's profitability.
Hidden Cost Unexpected costs added to the purchase.
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Gross and Net Domestic Product (GDP and NDP)
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