Explain short-run costs of a firm.
Answers
Answer:
A firm’s cost of production will depend on the inputs it uses. Further, use or employment of an input depends on the length of time. In other words, cost of production will vary depending on the production period. Production may be conducted on a short run or on a long rim basis. In view of this, inputs employed by a firm may be fixed and variable.
Short run is that period of time over which at least one input is held fixed. In the short run, the firm cannot change its fixed input to expand output. Only by varying variable inputs can a firm change its volume of output. Thus, in the short run, total cost (TC) is divided into two broad components: total fixed cost (TFC) and total variable cost (TVC).
Explanation:
Answer:
Definition: The Short-run Cost is the cost which has short-term implications in the production process, i.e. these are used over a short range of output. ... From an analytical point of view, the short run costs vary with the change in the total output, but however, the size of the firm remains the same.