On Naomi's pig farm, Naomi hires all the labor used, grows all the grain fed to the pigs, and owns the barn.The costs used to calculate the total cost curve include
A)only the cost of labor.
B)only the cost of labor and the cost of grain, which is completely consumed in the period in which it is grown.
C)only the variable cost of growing grain.
D)the cost of labor, the cost of growing grain, and the opportunity cost of the barn.

Question

Quizplus · Accepted Answer

The total cost curve includes all costs incurred in the production of output, including the cost of labor, the cost of growing grain, and the opportunity cost of the barn. Since Naomi hires all the labor used and grows all the grain fed to the pigs, both of these costs are relevant. Additionally, Naomi owns the barn, and therefore incurs an opportunity cost by using it for pig farming instead of renting it out or using it for other purposes.

On Naomi's Pig Farm, Naomi Hires All the Labor Used