Estimation And Costing

The correct option is (C) :Next best alternative foregone.

The correct option is (A) :Increase in Export.

Step 1: Recall the relationship between AC and MC.
- When , average cost decreases.
- When , average cost increases.
- When , average cost is at its minimum point.
Step 2: Apply to the question.
The marginal cost curve always cuts the average cost curve at its minimum point.
Final Answer:

Step 1: Recall formula.
Profit = Total Revenue – Total Cost. Step 2: Evaluate each option.
- (A) Cost of production = expenses incurred to produce goods, not difference.
- (B) Input cost = cost of resources, not difference.
- (C) Marginal cost = change in total cost due to one more unit, not relevant here.
- (D) Profit = correct, the residual after subtracting costs from revenue.
Step 3: Conclusion.
The difference between revenue and cost is called profit.
Final Answer:

Step 1: Recall the concept.
Marginal cost (MC) is defined as the change in total cost resulting from producing one more unit of output. Step 2: Evaluate options.
- (A) Average cost = total cost ÷ quantity, not change.
- (B) Variable cost = cost of variable inputs, not change per unit.
- (C) Fixed cost = does not vary with output.
- (D) Short run marginal cost = correct definition, .
Final Answer:

Step 1: Recall the concept of normal profit.
Normal profit means revenue = cost (including opportunity cost). Profit = 0 (economic sense).
Step 2: Identify the point.
This occurs where total revenue = total cost, i.e., at the break-even point.
Step 3: Eliminate incorrect options.
- (B) Average profit → not the concept here.
- (C) LRAC → a curve, not a point of profit.
- (D) Fixed cost → irrelevant to profit condition.
Final Answer:

Step 1: Formula of AFC.
where = Total Fixed Cost, = Output. Step 2: Explanation.
Since TFC is constant, as output increases, AFC decreases continuously but never reaches zero. Its curve forms a rectangular hyperbola to both axes.
Step 3: Eliminate options.
- (A) Constant → wrong, AFC falls.
- (B) U-shaped → applies to AC and AVC, not AFC.
- (C) Correct → rectangular hyperbola.
- (D) Reverse hyperbola → not used in cost curves.
Final Answer:

Step 1: Effect of technology on costs and productivity.
Technological progress raises productivity and/or lowers per-unit costs for a given level of inputs.
Lower costs at each output level → firms are willing to supply more at each market price.
Step 2: Translate to supply curve movement.
At every price, quantity supplied increases → the entire supply curve shifts rightward (outward).
A leftward shift would indicate higher costs or reduced capacity, which is opposite to technological progress.
Final Answer: