Producer Behaviour and Supply Test - 8

Opportunity cost is the next best alternativesacrificed. Opportunity cost is defined as the cost of the next bestalternative foregone. It represents the sacrifices that people must make due tothe scarcity of resources. Resources are limited but wants are unlimited, thuschoices must be made.

The zero slope of the average cost curve implies that the cost has reached its minimum level. At the minimum level, the average cost becomes equal to the marginal cost.

"It is the next best alternative that isavailable in a given situation" and "It is the next best alternativethat is sacrificed in a given situation" is the true meaning ofopportunity cost.

An increase in taxes on production raises the cost of production, leading to a decrease in the quantity supplied at each price level and shifting the supply curve to the left.

In the long run, all costs are variable because the firm can adjust all inputs, including labor, capital, and raw materials, to its desired level of output without any constraints from fixed inputs.

Marginal cost represents the additional cost incurred by producing one more unit of output. It helps in making decisions regarding the level of production, as firms aim to produce where marginal cost equals marginal revenue for profit maximization.

The determinants of supply include factors such as input prices, technology, government policies, and expectations, which influence the production costs and the willingness of producers to supply goods at various price levels.

It is the per unit cost of production obtained by dividing the total cost (TC) by the total output (Q) or mathematically expressed, AC = $\frac{TC}{Q}$

When the total revenue is greater than the totalcost, it is a situation of Abnormal profits.

Total product refers to the overall quantity of output produced by a firm. It includes all units of output regardless of the level of input utilized in the production process.