Q: Suppose the total cost of production of commodity X is Rs 1,25,000. Out of this implicit cost is Rs 35,000 and normal profit is Rs 25,000. What will be the explicit cost of commodity X ?
Ans: Rs 65,000.
This question appears in the model test paper book with the same answer in about 4-5 different model papers.
As I understand in Economics, total cost=explicit cost + implicit cost
So, explicit cost=total cost - implicit cost=1,25,000-35,000=Rs 90,000.
Please tell me if I am wrong or is the book wrong.
CAclubindia
