Page 121 - DECO101_MICRO_ECONOMICS_ENGLISH

Micro Economics Ashwani Panesar, Lovely Professional University

Notes Unit 9: Cost Concepts

CONTENTS

Objectives
Introduction
9.1 Types of Costs
9.1.1 Future and Past Costs
9.1.2 Incremental and Sunk Costs

9.1.3 Replacement and Historical Costs
9.1.4 Explicit Costs and Implicit or Imputed Costs (Accounting Concept of Cost and
Economic Concept of Cost)

9.1.5 Actual Costs and Opportunity Costs
9.1.6 Direct (or Separable or Traceable) Costs and Indirect (or Common or Non-
traceable) Costs
9.1.7 Shut-down and Abandonment Costs

9.1.8 Fixed and Variable Costs
9.2 Short Run and Long Run Costs
9.2.1 Costs in Short Run
9.2.2 Costs in the Long Run

9.3 Linkage between Cost, Revenue and Output through Optimisation
9.4 Economies of Scale
9.4.1 Internal Economies and Diseconomies of Scale
9.4.2 External Economies and Diseconomies of Scale
9.5 Summary

9.6 Keywords
9.7 Self Assessment
9.8 Review Questions
9.9 Further Readings

Objectives

After studying this unit, you will be able to
List the types of cost
Explain the behaviour of cost curves in short run
Describe the behaviour of cost curves in the long run

Discuss the linkage between cost, revenue and output through optimisation
State the concept of economies of scale

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