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Cost of production of the producer is given by:
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- sum of wages paid to labourers.
- sum of wages and interest paid on capital.
- sum of wages, interest, rent and supernormal profit.
- sum of wages, interest, rent and normal profit.
- sum of wages paid to labourers.
Correct Option: D
The following elements are included in the cost of production: (a) Purchase of raw machinery, (b) Installation of plant and machinery, (c) Wages of labor, (d) Rent of Building, (e) Interest on capital, (f) Wear and tear of the machinery and building, (g) Advertisement expenses, (h) Insurance charges, (i) Payment of taxes, (j) In the cost of production, the imputed value of the factor of production owned by the firm itself is also added, (k) The normal profit of the entrepreneur is also included In the cost of production.
