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Assertion:The short run marginal cost (SMC) is defined as the change in total variable cost per unit of change in output. Reasoning: When we change the level of output in short term, whatever change occurs to total cost is entirely due to the change in total variable cost because fixed cost cannot be changed in the short run. |
Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A. Both Assertion (A) and reasoning (R) are correct and but R is not the correct explanation of A. Assertion (A) is true but Reasoning (R) is not correct. Assertion (A) is not true but Reasoning (R) is correct. |
Assertion (A) is not true but Reasoning (R) is correct. |
The correct answer is option 4: Assertion (A) is not true but Reasoning (R) is correct. Assertion:The short run marginal cost (SMC) is defined as the change in total variable cost per unit of change in output. This is incorrect. The short run marginal cost (SMC) is defined as the change in total cost per unit of change in output. SMC = change in total cost/ change in output i.e. ΔTC/ΔQ The correct definition uses total cost (TC) in the numerator, not just total variable cost (TVC). [This is the definition given in NCERT. Also refer to table 3.3 of this chapter in NCERT -Page 45] Reasoning: When we change the level of output in short term, whatever change occurs to total cost is entirely due to the change in total variable cost because fixed cost cannot be changed in the short run. This is correct. TFC is constant in the short run, so any change in TC is due to TVC. |
