The income or gain expected from the second-best use of resources lost due to the best use of the scarce resources is known as
Opportunity cost
Opportunity cost is the value of the best alternative forgone when a resource is used for a particular purpose. It measures the benefit sacrificed, rather than merely the cash expenditure incurred.
Important Questions from Marginal Costing - Teaching
A company proposes to introduce a new product in the market. The company wants to maintain P/V Ratio at 25%. If variable cost of the product is Rs. 300, what will be the selling price?
When labour is plotted on X-axis and capital is plotted on Y-axis and an iso-quant is prepared, then which of the following statements is/are false ?
(a) Marginal rate of technical substitution of labour for capital is equal to the slope of the iso-quant.
(b) Marginal rate of technical substitution of labour for capital is equal to change in the units of capital divided by the change in the units of labour.
(c) Marginal rate of technical substitution of labour for capital is the ratio of marginal productivity of capital to marginal productivity of labour.
