The word economics comes from ancient greece like so many words and important ideas when an economist was the manager of an estate. With limited heath care resources, decisionmakers need information on the economic burden of diabetes, the longterm effects of diabetes interventions and policies, and which interventions offer the largest health benefit. Gregory mankiws principles of microeconomics, 2nd edition, chapter. A list and definition of different types of economic costs fixed, variable, total, marginal, sunk, accounting, opportunity cost. Economic evaluation is the comparative analysisevaluation of two or more interventions in terms of their cost and consequences it is the evaluation or assessment of different programs based on their input given vs resultsoutcomes generated. A cost is the value of money that has been used up to produce something. Cost, in common usage, the monetary value of goods and services that producers and consumers purchase. Indian economics mcq pdf download 2000 questions download more than 2000 indian economics questions pdf free for upsc prelims 2018,ibps,sbi po,ibps po. It is quite essential for a firm to understand the difference between various cost concepts for the purpose of productionbusiness decision making.
Those very practical economists grappled with all the basic problems of economic decisionmaking facing a modern executive today. In this type of economic system, the government decides how much workers should produce rulers and centralized governments impose their economic choices on society in the form of production quotas, etc. The two basic types of costs incurred by businesses are fixed and variable. Microeconomics analyzes basic elements in the economy, including individual agents and markets, their interactions, and the outcomes of interactions. In the pacific, the use of costbenefit analysis to support the design and assessment of projects is still relatively new. This section provides lecture notes from the course. Since resources are scarce relative to needs,1 the use of resources in one way pre vents their use in other ways. Check out this freebie that includes 5 nonfiction paragraphs about basic economics written in different text structures. Modeling and economics studies use computer models to simulate the longterm health and cost outcomes of diabetes interventions. Costofillness analyses are a type of burdenofdisease measure. When transactions occur within an organization, the transaction costs can include managing and monitoring personnel and procuring inputs and capital. They can vary with changes in the activity or product. In the shortrun, at least one factor of production is fixed, so firms face both fixed and variable costs.
For example the monetary expenditure on purchase of raw material, payment of wages and salaries, payment of rent and other charges of business etc can be termed as money cost. The last section discusses the increasingly important role of critical thinking in economics, and suggests ways that you can increase your own critical thinking skills. Lecture notes principles of microeconomics economics. The term real cost of production refers to the physical quantities of various factors used in producing a commodity. Comparing economic systems nc essential standards for. Anything produced in the economy comes, ultimately, from some combination of these resources.
Discuss the similarities and differences between the various types of economic systems. For instance, the cost of making and selling hotdogs is the money invested in bread, sausages, mayonnaise, mustard and a grill. Here, costs include imputed value of the entrepreneurs own resources and services, as well as the salary of the ownermanager. Shortrun and longrun cost concepts are related to variable and fixed costs respectively, and often marked in economic analysis. A pool of activity costs associated with particular processes and used in activitybased costing abc systems. The opportunity cost of investing in a healthcare intervention is best measured. This type of isoquant are depicted by a straight line sloping downward from left to right, as shown in figure8. Economics module 2 economy its meaning and types about economy 26 notes 4. For example, if you take time off work to a training scheme. Retail prices depend on this system and the last four processes listed. Managerial economics applies microeconomic theories and techniques to management decisions.
Ordinarily, costs refer to the money expenses incurred by a firm in the production process. Cost which changes in accordance with production change. Mix play all mix economics on your tips youtube how to solve cost numerical in just 1 minute 12th class economics by sanjeev kumar duration. Ppcshows all the possible combinations of 2 goods or services.
It indicated a perfect and unlimited substitutability between two factors implying that the product may be produced even by using only capital or labour. Scarcity and opportunity cost the economic problem key economic concepts made easy these worksheets and the powerpoint were designed to assist with the teaching of key economic concepts that. Marginal cost is the additional cost incurred to produce and additional unit of output or it is the cost of the marginal unit produced. Additional cost incurred by the firm by producing one more units extra. Cost of producing a good, in economics is the sum total of all the, a. Cost incurred for the expansion of plant, for increase in the production. In the face of tight budgets, immediate tradeoffs loom. This video helps students understand the cost chapter of economics subjects in a very lucid manner. Cost cbse notes for class 12 micro economics cbse notescbse notes micro economicsncert solutions micro economics introduction this chapter gives a detailed version of cost and its types, related numericals and the relationship between them.
Ten years ago, examples of costbenefit analysis were hard to find. In order to understand the general concept of costs, it is important to know the following types of costs. A good example of a project that did draw on the lessons of costbenefit analysis to inform which activities. Money cost of production is the actual monetary expenditure made by company in the production process.
Generally speaking, a cost is what you have to give up in order to acquire something you want. There are various concepts of cost that a firm considers relevant under. Also, ask students to think about some of the advantages and disadvantages of each type of system. These types of cost do not directly affect the level of production but may vary with change in production facilities e. Definition of cost the expenses faced by the business in the process of supplying goods and services to consumer 4. Economics is conventionally divided into two subjects called. Economics, therefore, is a social science, which examines people behaving according to their selfinterests.
Total cost it refers to the total cost of production. Total, average and marginal cost concepts are used in economic analysis of firms production activities. Governmental decisionmakers and planners perform the functions of a market some empires in the distant past had command economies. The definition set out at the turn of the twentieth century by alfred marshall, author of the principles of economics, reflects the complexity underlying economics.
These should not normally be taken into account when determining whether to continue a project or. These economics pdf have mcq which have asked by ssc in previous various exam,we have found that ssc have repeated theirs question in various exam. In economics, an implicit cost, also called an imputed cost, implied cost, or notional cost, is the opportunity cost equal to what a firm must give up in order to use a factor of production for which it already owns and thus does not pay rent. Modeling and economics research projects diabetes cdc. Examples of direct costs include manufacturing costs relating to production, customer acquisition costs pertaining to sales, etc. True cost economics is an economic model that seeks to include the cost of negative externalities into the pricing of goods and services. The following are the various cost conceptstypes of costs. Indian economics mcq pdf indian economy mcq 2020 pdf upsc. These lecture notes were prepared by xingze wang, yinghsuan lin, and frederick jao specifically for mit opencourseware. In the cost theory, there are two types of costs associated with production fixed costs and variable costs. To an accountant or any other individual ot her than an ec onomist, cost refers to the monetary expenses incurred by a firm in the course of producing a commodity. The existence of alternative uses forces us to make choices. The concepts of scarcity, choice, and opportunity cost are at the heart of economics. These cost concepts are discussed in detail in the following section.
Cost and costing techniques in managerial economics informatics. The patent system allows manufacturers to behave as monopolists, charging what the market will bear. Costofillness estimates can be incidencebased reflect. Cost, price and profit constitute building blocks of. Cost cbse notes for class 12 micro economics learn cbse.
Accounting costs are the costs recorded for the purpose of preparing the balance sheet and profit and ton statements to meet the legal, financial and tax purpose of the company. The economic profit is computed by including opportunity costs to the equation. In a basic economic sense, cost is the measure of the alternative opportunities foregone in the choice of one good or activity over others. Land refers to the physical space on which production takes place, as well as the natural resources found under it or on it, such as oil, iron, coal, and lumber. Fixed costs do not vary with output, while variable costs do. Economic cost includes both the actual direct costs accounting costs plus the opportunity cost. Cost which does not change when there is change in the production. Notes on cost this article explains the meaning of cost, various types of cost in finance, economics, accounting. Be able to explain and calculate average and marginal cost to make. Different combinations of cost ingredients are appropriate for various kinds of managerial problems. It is more limited in scope as compared to microeconomics.
For guidance, a list of advantages and disadvantages of each system is attached. Cost analysis can include costofillness coi estimates, which take into account the direct costs medical and nonmedical and indirect costs associated with a health condition. Transaction cost economics focuses on the organization of transactions that occur whenever a good or service is transferred from a provider to a user across a technologically separable interface. Think about the last lecture you attended at your college. Different cost concepts an overview economics discussion. A good is scarce if the choice of one alternative requires that another be given up. Cost incurred for single unit of production in the total production. This introduces the terms used in cost chapter such as fixed cost, variable cost, explicit cost. Macroeconomics deals with the performance, structure, and behavior of an economy as a whole.
The shape of the cost curves in the short run reflect the law of diminishing returns cost theory types of costs. Rent of the building, interest on capital, salaries, and wages. Money cost thus includes all the business expenses which involve outlay of money to support business operations. Types of cost economics l concepts l topics l definitions l online. Semi variable cost it refers to costs which are partly fixed and partly variable. Indirect costs, or untraceable costs, are those which do not directly relate to a specific activity or component of the business. Types of costs opportunity cost and actual cost direct and indirect cost explicit and implicit cost. Department of economics, nnamdi azikiwe university awka nigeria, pp. Brown, an economy is a system by which people get living. In production, a cost is the necessary initial investment needed to initiate the production process. The lecture notes are from one of the discussion sections for the course.
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