Match List I with List II

LIST I (Production Cost)		LIST II (Underlying Meaning)
A.	Implicit Costs	I.	Change in the total cost per unit change in output.
B.	Marginal cost	II	Total increase in costs resulting from the implementation of a particular managerial decision.
C.	Incremental Cost	III.	Inputed value of inputs owned and used by the firm.
D.	Sunk Cost	IV.	The costs that are not affected by managerial decision.

Choose the correct answer from the options given below: 

The correct answer is A - III, B - I, C - II, D - IV/

Key Points Here is an explanation of each of the terms:

• Implicit Costs: These are the costs of inputs that are owned and used by the firm, but are not directly paid for. For example, the cost of using the firm's own capital is an implicit cost.
• Marginal Cost: This is the change in the total cost per unit change in output. For example, if the total cost of producing 10 units is $100, and the total cost of producing 11 units is $105, then the marginal cost of producing the 11th unit is $5.
• Incremental Cost: This is the total increase in costs resulting from the implementation of a particular managerial decision. For example, if a firm decides to hire an additional worker, the incremental cost of that decision would be the wage paid to the worker plus any other costs associated with the hiring, such as the cost of training the worker.
• Sunk Cost: These are the costs that have already been incurred and cannot be recovered. For example, the cost of purchasing a machine is a sunk cost if the machine is no longer used by the firm.

 Important Points