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.
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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.
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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.
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4
Q

Define Variable costs

A
  • Variable costs are costs that increase as output is increased.
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5
Q

What do total costs consist if?

A
  • Total costs are Total fixed costs + Total variable costs.
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6
Q

Define Marginal cost

A
  • Marginal cost refers to the cost of increasing output by one additional unit.
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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.
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