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Suppose, the total cost of production of commodity X is Rs. 1,25,000. Out of this cost implicit cost Rs. 35,000 and normal profit is Rs. 25,000. What will be the explicit cost of commodity X?
  • a)
    90000
  • b)
    65000
  • c)
    60000
  • d)
    1,00,000
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
Suppose, the total cost of production of commodity X is Rs. 1,25,000. ...
Total cost of production of commodity X = Rs. 1,25,000
Implicit cost = Rs. 35,000
Normal profit = Rs. 25,000

Explicit cost can be calculated by subtracting the implicit cost and normal profit from the total cost of production.

Explicit cost = Total cost of production - Implicit cost - Normal profit
Explicit cost = Rs. 1,25,000 - Rs. 35,000 - Rs. 25,000
Explicit cost = Rs. 65,000

Therefore, the explicit cost of commodity X is Rs. 65,000. Option B is the correct answer.
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Community Answer
Suppose, the total cost of production of commodity X is Rs. 1,25,000. ...
125000-35000-x = 25000
125000-x =25000+35000
125000-x=60000
-x=60000-125000
-x = -65000
x=65000
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