Fixed and variable Costs

Question 1

short run

Answer 1

a period of time when there is at least one fixed variable in the factors of production

usually there are two fixed factors: land and capital

Question 2

long run

Answer 2

a period of time when all factors of production is variable

Question 3

the two different types of costs are:

Answer 3

implicit costs and explicit costs

Question 4

what is implicit cost

Answer 4

a businesses opportunity cost. it is the profit they couldve made while selling their next best Alternative

Question 5

explicit costs are made of:

Answer 5

fixed costs and variable costs

Question 6

what is a fixed cost

Answer 6

fixed costs do not vary with output so even if nothing is being produced a business has to pay fixed costs.

Question 7

what is a variable cost

Answer 7

a cost that varies with output: a business pays more as they produce more

Question 8

examples of fixed costs

Answer 8

1) rent
2) saleries
3) interests on loans
4) advertisments
5) business rates

Question 9

examples of variable costs

Answer 9

1) wages
2) utility bills
3) raw material costs
4) transport costs