Option 3: (A) - (III), (B) - (I), (C) - (IV), (D) - (II) -> Let's match each item correctly:
(A) Total Cost = (III) Explicit Costs + Implicit Costs: Total cost includes all costs incurred by a firm - both explicit costs (actual monetary payments like wages, rent) and implicit costs (opportunity costs like owner's time).
(B) Marginal Cost = (I) Change in total cost when an additional unit of output is produced: This is the textbook definition of marginal cost - it measures the additional cost of producing one more unit.
(C) Fixed Cost = (IV) Does not change with increase or decrease in output: Fixed costs remain constant regardless of production level (e.g., rent, insurance, salaries of permanent staff).
(D) Short period Average Cost (AC) Curve = (II) Vertical summation of Average Fixed Cost (AFC) and Average Variable Cost (AVC) curves: In the short run, AC = AFC + AVC, so the AC curve is obtained by vertically adding the AFC and AVC curves at each output level. -> correct