2.What do you mean by the concepts opportunity cost and marginal cost ?
Dear Student,
Marginal Cost
The cost incurred on additional unit of output is known as Marginal cost.
Opportunity Costs
Opportunity Costs are the benefits that an individual, investor or business forego (miss out) , when they choose one alternative over another. Opportunity Cost is the next best alternative, which is foregone, when a particular alternative is chosen.
Example: Suppose, you have Rs. 20,000 and you want to purchase a laptop and an LCD TV. However, with only Rs. 20,000 in hand you cannot buy both as their total cost is more than Rs. 20,000. If you decide to buy the Laptop, then the opportunity cost of choosing the laptop , is the cost of the foregone satisfaction from the LCD TV and vice versa.
Regards.
Marginal Cost
The cost incurred on additional unit of output is known as Marginal cost.
Opportunity Costs
Opportunity Costs are the benefits that an individual, investor or business forego (miss out) , when they choose one alternative over another. Opportunity Cost is the next best alternative, which is foregone, when a particular alternative is chosen.
Example: Suppose, you have Rs. 20,000 and you want to purchase a laptop and an LCD TV. However, with only Rs. 20,000 in hand you cannot buy both as their total cost is more than Rs. 20,000. If you decide to buy the Laptop, then the opportunity cost of choosing the laptop , is the cost of the foregone satisfaction from the LCD TV and vice versa.
Regards.