A MANAGERIAL ECONOMICS PRESENTATION

COST ANALYSIS
Imad Shahid khan surbhi Tiwari vamsi Phanindra anil kumar
5
Sec A, 1
st
semester, bachelor of business management
Cost Of Production
Real Cost
Money Cost
Opportunity Cost
Total Cost
Average Cost Marginal Cost
Explicit Cost
Implicit Cost
COST IN MANAGERIAL ECONOMICS
Cost is normally considered from a Producers point of view.

A firm employs various factors of production like Land, Labor,
Capital, etc. to produce a commodity or a service.

Cost of Production is the aggregate of price paid to compensate
these factors of production.


Real Cost


A philosophical concept which implies all the efforts, services, pains
and sacrifices made in producing a commodity.

Signifies toils, troubles, sacrifice on account of loss of consumption
for savings, social effects of pollution caused by factory smoke,
automobiles, etc.

An abstract idea whose exact measurement is not possible

Opportunity cost


Value of the best alternative forgone, where a choice needs to be
made between several mutually exclusive alternatives given limited
resources.

Measured in terms of foregone alternatives

Is not limited to just financial or monetary value.


APPLICATIONS OF OPPORTUNITY COST



Determination of Relative Price of Goods.

Determination of Normal Remuneration to a Factor.

Decision-Making and Efficient Resource Allocation.

Money cost



Cost of production measured in terms of money.

Monetary expenditure on inputs of various kinds - raw materials,
labours, etc., required for the output.

Is the outlay cost, i.e., the actual financial expenditure of the firm.