Costs Flashcards
1
Q
Define Short run.
A
- Short Run refers to a time period in which at least one factor of production is fixed.
- This time period may vary greatly between firms.
2
Q
Define Long Run.
A
- The long run refers to a time period in which all of a firms factors of production are variable.
3
Q
Define Fixed costs
A
- Fixed cost are costs that don’t vary with output, and stay constant with changes to the size of the firm.
4
Q
Define Variable costs
A
- Variable costs are costs that increase as output is increased.
5
Q
What do total costs consist if?
A
- Total costs are Total fixed costs + Total variable costs.
6
Q
Define Marginal cost
A
- Marginal cost refers to the cost of increasing output by one additional unit.
7
Q
Define Costs.
A
- Economic cost refers to the price a firm has to pay to produce its good or service.
- This includes opportunity cost (time, space,etc) as well as monetary cost.