A Study on Opportunity,Total, and Marginal Costs

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Opportunity costs, total costs and marginal costs What are opportunity costs? How do explicit and implicit costs relate to opportunity costs? Opportunity cost is the value of the best alternative that one gives up for the current choice or decision. It is an important concept in economics and is used for emphasizing the relationship between scarcity and choice. It is the cost sacrificed or foregone in any decision. These opportunity costs extend to all aspects of production and consumption. Two costs related to opportunity costs are explicit and implicit costs. Explicit costs is the direct monetary payment or expense that a producer incurs by choosing one option over another. For example, a firm incurs $1000 as wages for workers when it decides to produce steel pans instead of cast-iron pans and this $1000 is considered as the explicit opportunity cost for the production of steel pans. Implicit costs, on the other hand, are those that cannot be measured directly and do not involve any monetary payments. A good example is when someone chooses between working and staying at home for personal reasons. The implicit opportunity cost is the salary that is lost by not working and staying at home to pursue a passion. Â If the average total cost curve is falling, what is necessarily true of the marginal cost curve? If the average total cost curve is rising, what is necessarily true of the marginal cost curve? The total cost curve (TC) is the cost of production for a company
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