Short run costs - Fixed and Variable Flashcards
1
Q
What does short run mean ?
A
When there is at least one fixed factor of production
2
Q
What does long run mean ?
A
When all factors of production are variable
3
Q
What are the 2 types of cost ?
A
Explicit - fixed and variable
Implicit - opportunity cost
4
Q
Give some examples of fixed costs ( EXPLICIT COSTS )
A
Rent
Salaries
Advertising
Business rates
Interest on loans
5
Q
Give some examples of variable costs ( EXPLICIT COSTS )
A
Wages
Utility bills
Raw material costs
Transport costs
6
Q
What is opportunity costs ?
A
Profit they could have made doing the next best alternative
7
Q
Draw out the Total Fixed cost diagram
A
8
Q
Draw out the Average Fixed cost diagram
A
9
Q
Draw the Average Variable cost diagram
A
10
Q
A
