Fixed costs do not affect short-run marginal cost because they are just that- fixed. They are not dependent on quantity when it changes and does not vary directly with the level of output. Variable costs, however, do affect short-run marginal costs.
its fixed cost
It is fixed in the short run, and variable in the long run
Short run analysis centres around the assumption of fixed prices. No time for them to change Long Run analysis assumes there are no fixed factors of production. Costs can be assumed to varyshort run is effects that last only temporarily,long run is effects that last quite a long timedvfv ccddzzczxzczxczzzzxzeddddddddfasddheeni pooku lo naa sulli petti..dengithe..vuntadhi..lavada..Shutting down in the long run is usually after efforts of keeping it afloat after the obvious signs, shutting down in the short runs refers to the immediate shut down after the signs.
Some committed fixed costs are the most difficult of fixed costs to change because they are required to maintain basic operations. For example, rent is a fixed cost that is difficult to change because it is bound by a lease.
For a given configuration of plant and equipment, short-run costs vary as output varies. The firm can incur long-run costs to change that configuration. This pair of terms is the economist's analogy of the accounting pair, above, variable and fixed costs
In the short run, all costs are considered variable except for fixed costs, which remain constant. Total cost in the short run can fluctuate due to changes in variable costs, affecting average total cost. In the long run, all costs become variable, allowing for more flexibility in adjusting production levels to optimize efficiency and minimize costs. Fixed costs become average fixed cost and average variable cost in the long run as they spread over more units of production.
Fixed costs do not affect short-run marginal cost because they are just that- fixed. They are not dependent on quantity when it changes and does not vary directly with the level of output. Variable costs, however, do affect short-run marginal costs.
A firm would still operate if revenues are below total coots, but not if revenues are below variable costs. The reason is that as long as revenues are above variable costs, the firm will earn a difference to contribute to the fixed costs (fixed costs are costs that a company has to pay in the short-run whether it operates or not). If the firm stops operating in the short-run, it will have to pay for the full fixed costs (e.g., rent, some fixed labour) If revenues are below variable costs, for every unit of production, the company loses the difference and does not contribute to the fixed costs. It is more economical to shutdown in the short-run.
Some costs are semi-variable, e.g. electricity, maintenance, and rise with output but not inproportion. Labour may be fixed in the short run.
Some costs are semi-variable, e.g. electricity, maintenance, and rise with output but not inproportion. Labour may be fixed in the short run.
its fixed cost
It is fixed in the short run, and variable in the long run
step cost : its a cost that is fixed cost during the short run within the relevant range , and it will become variable cost over the long run as supervisory salary .
what does fixed costs mean
Fixed costs are considered capacity costs because if a company expands, fixed costs will change. Additionally, if a company adds more resources, fixed costs will change.
Generally variable costs are relevant costs but if due to any decision fixed costs are also going to affected then fixed costs are also relevant costs.