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Answer Posted / vijay gawalkar
Scarcity of resources is one of the more basic concepts of
economics. scarvity necessitates trade-offs, and trade-offs
result in an opportunity cost. While the cost of a good or
service often is thought of in monetary terms, the
opportunity cost of a decision is based on what must be
given up (the next best alternative) as a result of the
decision. Any decision that involves a choice between two
or more options has an opprtunity cost.
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In Pricing the gallons of petrol sold,service station 'A' follows the first-in-first-out method,while service station'B'follows last-in-first-out method.On 1st January both has the same quantity in stock viz.6,000 gallons at Rs.26 per gallon.During the month,each station recieved additional supplies of 6,000 gallons at Rs.27.50 per gallon.Sales for each of these two stations,during the month,were 8,800 gallons at Rs.29 per gallon. Determine for each service station,profit earned during the month and value of the petrol in stock at close of the month.
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