Cost of Production: Elements Exposed

Which of the following is the BEST definition of 'Cost of Production' in economics?

• AThe profit earned by an entrepreneur after selling goods.
• BThe price at which a commodity is sold in the market.
• CThe depreciation value of machinery used in production.
• DThe total sum of money required for the production of a specific quantity of output.

Which of the following is an example of an 'implicit cost'?

• ARent paid for a building used in production.
• BExpenses on the purchase of raw materials.
• CWages paid to hired labor.
• DThe salary an entrepreneur could have earned working elsewhere instead of in their own business.

Which of the following is NOT typically included as an element of production cost?

• AWages of labor
• BPurchase of raw materials
• CInterest on capital
• DPersonal expenses of the entrepreneur

What does 'Opportunity Cost' refer to?

• AThe total cost of production, including explicit and implicit costs.
• BThe cost of purchasing the most expensive resource for production.
• CThe value of a resource in its next best use; the income forgone by not choosing the next best alternative.
• DThe actual expenses incurred in producing a good or service.

Which of the following would be classified as a 'selling cost'?

• ACost of raw materials
• BWages paid to factory workers
• CTransportation costs to deliver finished goods
• DRent for the factory building