Cost Of Production and Concept of Revenue — Economics STD 11 Commerce — Question
Gujarat BoardEnglish MediumSTD 11 CommerceEconomicsCost Of Production and Concept of Revenue2 Marks
Question
What is opportunity cost? Explain with illustration fins
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Answer
When any factors of production is joint for production of any commodity, then it has to leave the second best alternative.
Thus, the factor's which income was left, it is his opportunity cost.
In short "The unborn is the cost of born".
Example :
Suppose, one piece of land is used for Cotton, Tobacco and Millet for cultivation.
If , cotton is cultivate then we get 4 laths income, if we cultivate tobacco.
We get t $3.5$ laths and if we cultivate millet then we get $3$ laths income.
In this situation the farmer will use cotton for cultivation of, which has highest expected income, so the nearest best alternative income of tobacco will be waved.
Thus, the income of the best alternate Tobacco (t $3.5$ laths) is become a opportunity cost of land which use for to cultivation of cotton.
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