this slide contains a ppt for B.Ed students on commerce student. it is presented on the topic of cost of producation

1. Introductory Questions

2. •Que1-What does we
purchase from Market?

3. Que.1-What does we purchase from Market?
Ans.1- We purchase commodities or things of
our needs.
Que.2- How does we purchase the commodity?

4. Que.1-What does we purchase from Market?
Ans.1- We purchase commodities or things of our
needs.
Que.2- How does we purchase the commodity?
Ans.2- By paying the money.
Que.3-How the price of the commodity is decided?

5. Que.1-What does we purchase from Market?
Ans.1- We purchase commodities or things of our
needs.
Que.2- How does we purchase the commodity?
Ans.2- By paying the money.
Que.3-How the price of the commodity is decided?
Ans.3- On the basis or expenditure incurred by
producer.

6. Que.1-What does we purchase from Market?
Ans.1- We purchase commodities or things of our
needs.
Que.2- How does we purchase the commodity?
Ans.2- By paying the money.
Que.3-How the price of the commodity is decided?
Ans.3- On the basis or expenditure incurred by
producer.
Que.4- What does we called that expenditure from
producers point of view?

8. •Money expenditure
incurred by a firm in
production of a commodity
is called the cost of
production.
Meaning Of Cost

9. “COST is the sum of explicit costs
and implicit costs constitute cost
of production of a commodity”
Definition Of Cost

10. A firm requires factor input and non-factor inputs for
producing a commodity.
These inputs are to be paid for since they are scarce.
The firm pays in the form of money e.g., Rent to landlord,
salaries and wages, interest, material, power,
transportation, etc.
These are cost to the firm and are called money costs
because these are paid in the form of money.

11. Que.1- What do you understand by
Cost of Production?

12. Que.1- What do you understand by Cost of
Production?
Ans.1-Money expenditure incurred by a firm
in production of a commodity is called the cost
of production.

14. Explicit Costs is a direct payment made to others in the course of
running a business, such as wage, rent and materials, as
opposed to implicit costs, which are those where no actual
payment is made.
Explicit cost are those case payment which firm make to
outsiders fir their services and goods.
Implicit Costs are costs of self-owned or self-employed
resources. Businesses don’t necessarily record implicit costs
for accounting purposes because money does not change
hands. Examples of implicit costs include the loss of interest
income on funds, and the depreciation of machinery for a
production.
Explicit Costs and Implicit Costs

15. Money cost of production refers to the money
expenditure incurred on hiring and buying of
inputs for producing a given amount of
commodity.
Real cost refers to the scarifies, discomfort, toil
and pain involves in supplying the factors of
production by their owners.
Money cost and Real Cost

16. “The opportunity cost of an activity is equal to
the value of next best alternative foregone.”
One has to forego something for getting
something and what is given up for getting
something is called the opportunity cost.
Opportunity cost represents the benefits an
individual, investor or business misses out on
when choosing one alternative over another.
Opportunity cost

17. The Short-run Cost is the cost which has short-
term implications in the production process.
In short run some factors are fixed (like
machinery, building etc.) which cannot be
change due to insufficiency of time while
other (like labour, raw material, power
etc.)are variable which can be change
according to the output to be produced. Short
run costs basically consist of FIXED COST
and VARIABLE COSTS.
Short–run costs

19. Fixed cost are the cost which do not change
with change in the level of output.
“Fixed cost remain even if output is zero”
For instance, rent of building, interest on past
borrowings, salaries of permanent employees,
insurance premium etc.
These costs are also called supplementary costs
or overhead costs.
Fixed cost and Variable Cost

20. Fixed cost

23. Variable Costs are the cost which vary directly
with the change in the level of output.
It includes inputs like labour,power,fuel, raw
materials etc. Variable costs are also the sum
of marginal costs over all of the units
produced.
These costs are also called as Direct costs and
prime costs.
Variable Cost

27. Recapitualization
Que.-1 Give 2 examples of Explicit Cost.
Que.-2 What do you understand by
Money Cost?

28. Que. 1- Write the Definition of Cost?
Que. 2- write 2 difference between
fixed cost and variable cost.
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