Economics 2150A/B Lecture Notes - Lecture 8: Fixed Cost, Fixed Capital, Variable Cost
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ECON 2150A/B Full Course Notes
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Cost curves allow for a firm to determine its profit maximization level of output. The decision of the quantity to produce and the mix of inputs all depends on the time frame available: short run or long run. Short run is a time frame in which the quantity of a certain resource is fixed (usually the fixed resource includes things like technology, buildings or in other words capital; k) The long run time frame is a time frame in which the quantities of all resources are variables. In this period, the firm can change the amount of capital used in production. Total cost: the um of the cost of all inputs used in production. Total fixed cost: the cost of all fixed inputs, which are usually independent of the level of output (usually k) Total variable cost: the total cost of all variable input, and it varies with the level of output. (usually l)