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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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