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Production and cost — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsProduction and cost4 Marks
Question
Define cost. Distinguish between fixed and variable costs. Give one example of each.
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Answer

Cost: In economics means the sum of actual money expenditure on inputs and imputed expenditure on inputs supplied by the owner including normal profit.
Fixed cost: Refers to cost which remains unchanged as output is increased, For example; rent, interest, etc.
Variable cost: Refers to cost which rises/falls as output is increased/decreased. For example; cost of raw materials, etc.

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