Question
Distinguish between:
- Fixed Cost and Variable Cost with examples.
- Average Cost and Marginal Cost with examples.
|
S. No.
|
Basis
|
Fixed Cost
|
Variable Cost
|
|
i.
|
Meaning
|
It does not change with change in quantity of output.
|
It changes with change in quantity of output.
|
|
ii.
|
Output
|
t remains the same whether output is zero or maximum.
|
It is zero when output is zero. It increases with increase in output and decreases with decrease in output.
|
|
iii.
|
Examples
|
Rent of building, licence fee, etc.
|
Cost of raw material, wages of casual labour, etc.
|
| S. No. | Basis | Average Cost | Marginal Cost |
| i. | Meaning | It is per unit cost of output | It is the change in Total Cost when more and more additional unit of a commodity is produced. |
| ii. | Formula | $\text{AC}=\frac{\text{TC}}{\text{Q}}$ | $\text{MC}_{\text{nth}}=\text{TC}_{\text{n}-1}\text{ or }\frac{\Delta\text{TC}}{\Delta\text{Q}}$ |
| iii. | Example | Production of 10 units is ₹ 70, then AC = 70 ÷ 10 = ₹ 7 | For producing, 4 units of a commodity costs ₹ 170 MC = 200 - 170 = ₹ 30. |
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.
| Price (₹) | $8$ | $6$ | $4$ | $2$ |
| Output (Units) | $1$ | $2$ | $3$ | $4$ |
| TR(₹) | - | - | - | - |
| MR (₹) | - | - | - | - |