Economics

Running head : ECONOMICS

Economics

[Author]

[University]

Economics

Variable Cost - defined as the cost of overhead , labor or inputs that changes based on the volume of production units (King , 2007 . Moreover this is also defined as the expenses of a businesses firm or producer that change in proportion to the activity of the business or simply the factors of production that changes over a short period of time

Fixed Cost - this are costs of the business firms that do not vary based on the volume of production or sales levels

. This may include rent property tax interest expense or anything that are considered to be a cost on the part of the company on the long run . Another definition of fixed cost would be it is the payment that is unchanging relative to the activity of the business or producer

Marginal Cost - is the unit change in output as This is basically the change in the is a unit change on the quantity produced . Mathematically , marginal cost is the derivative of the Average Cost - is defined as the quotient between the dividing were utilized in the production process . value of all the inputs that were used in to produce a certain good or service

sold of a business in the market . This is sometimes being related to of the Based from the given definitions of some of the key terms in the production process , it would be better if price and quantity of goods and services in the market for it includes in itself all of the inputs that were used in to produced a certain good or service . Moreover , any slight changes in the prices of inputs of the business , may it be fixed or variable cost , the businesses can easily adjust the prices of their goods which provide flexibility on the part of the businesses . Moreover , businesses do not have control over the prices of their inputs especially the variable costs and using would provide enough room for the businesses to adjust to the said external shock through increasing their mark-up in not to affect their profitability

Reference

King , W (2007 . Fixed and Variable Costs . Retrieved March 4 , 2008 , from HYPERLINK "http /william-king .www .drexel .edu /top /Prin /txt /Cost /cost2 .html http /william-king .www .drexel .edu /top /Prin /txt /Cost /cost2 .html

Economics PAGE \ MERGEFORMAT 3...