In this article we will discuss about the measurement of opportunity cost. The reader will also be able to learn about whether opportunity cost can ever be zero or not. In truth, the central problem faced by every society is the allocation of scarce resources to satisfy as many wants as possible. The problem arises because of three characteristics of [...]
In this article we will discuss about the relationship between marginal cost and average cost. The three cost curves TC, AC and MC describe the same physical data and are, therefore, related mathematically. Let TC (q) be the total cost of output q, AC (q), is defined as the total cost divided by the amount produced, or AC (q) = [...]
In this article we will discuss about the relationship between the short run and long run average cost curve. Any discussion of a firm's long-run cost behaviour starts with the proposition that in general firms plan in the long run and operate in the short run. In other words, the long run is the firm's planning period and the short [...]