Costs Flashcards
1
Q
What are fixed costs?
A
Costs that do not vary with output e.g. the cost of a factory
2
Q
What are variable costs?
A
Costs that do vary with output; e.g. electricity and materials
3
Q
What are total costs?
A
Fixed + variable costs
4
Q
What are short run costs?
A
In the short run, a firm can change a variable factor of production
5
Q
What are long run costs?
A
The long run is a period of time where firms can change the amount of capital, e.g. build a bigger factory.
In the long run, we can get economies and diseconomies of scale.
6
Q
What is average total cost?
A
total cost / quantity
7
Q
What is average variable cost?
A
variable cost / quantity
8
Q
What are average fixed costs?
A
Fixed costs / quantity
