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Production and cost — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsProduction and cost2 Marks
Question
Define cost. State the relation between marginal cost and average variable cost.
✓

Answer

Cost in economics refers to the sum of actual money expenditure on factor inputs and the imputed expenditure in the form of input services supplied by the owner, including normal profit.
Marginal Cost and Average Variable Cost are related to each other in the sense that:
  1. If MC is lesser than AVC, then AVC will fall.
  2. If MC is equals to AVC, then AVC remains constant.
  3. If MC is greater than AVC, then AVC will rise.

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