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In accounting and economics, fixed costs, also known as indirect costs or overhead costs, are business expenses that are not dependent on the level of goods or services produced by the business. They tend to be recurring, such as interest or rents being paid per month. These costs also tend to be capital costs.
Marginal cost (MC) is the change in total cost per unit change in output or ∆ C /∆ Q. In the short run, production can be varied only by changing the variable input. Thus only variable costs change as output increases: ∆ C = ∆ VC = ∆ ( wL ). Marginal cost is ∆ ( Lw )/∆ Q. Now, ∆ L /∆ Q is the reciprocal of the marginal product ...
A standard way of viewing these costs is per unit, or the average. Economists tend to analyse three costs in the short-run: average fixed costs, average variable costs, and average total costs, with respect to marginal costs. The average fixed cost curve is a decreasing function because the level of fixed costs remains constant as the output ...
In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In theoretical models where conditions of perfect competition hold, it has been demonstrated that a market will reach an ...
Average fixed cost. Short-run cost curves. In economics, average fixed cost ( AFC) is the fixed costs of production (FC) divided by the quantity (Q) of output produced. Fixed costs are those costs that must be incurred in fixed quantity regardless of the level of output produced. Average fixed cost is the fixed cost per unit of output.
Marginal cost. In economics, the marginal cost is the change in the total cost that arises when the quantity produced is increased, i.e. the cost of producing additional quantity. [ 1] In some contexts, it refers to an increment of one unit of output, and in others it refers to the rate of change of total cost as output is increased by an ...
Opportunity cost, as such, is an economic concept in economic theory which is used to maximise value through better decision-making. In accounting, collecting, processing, and reporting information on activities and events that occur within an organization is referred to as the accounting cycle.
The utilized amounts of the various inputs determine the quantity of output according to the relationship called the production function. There are four basic resources or factors of production: land, labour, capital and entrepreneur (or enterprise). [ 1] The factors are also frequently labeled " producer goods or services " to distinguish them ...