Explain short run costs, Business Economics

Assignment Help:

Explain short run costs breifly..

In analyzing factor cost in an environment, accountants and economists speak much the same language. This is become, in a competitive market, price of foods offered for sale tend to be based on the highest return obtainable by using them. That is to say, market price and opportunity cost come closer together; in fact, if the market is truly competitive, it is likely that they will be identical. However, an account thinks of a cost as allocated expense which must be reimbursed while an economist thinks of cost as some kind of sacrifice for bringing out intended conversion of inputs into output.

The total cost of any output is the value of all the inputs used in its production. Cost, therefore, will rise or fall as the ratio of outputs to inputs changes. Such changes may come about as a result of changes in the efficiency of the conversion process or changes in the prices of the inputs.

Average cost is the cost per unit of output needed to prevent the use of input in alternative uses. This ‘resistance’ is sometimes measured by the price of the factor used. When we are deciding upon proper allocation of more than one input, the resistance is generally measured in terms of the usefulness or marginal productivity of the resource in each use.

In the short run, just as the total costs are the aggregate of total fixed and variable costs, the average costs are also the aggregate of average fixed costs and average variable costs.

Marginal costs refer to change in cost, obviously in variable part of the cost. As the total variable costs vary with the level of output produced, the marginal costs vary with the level of output produced, the marginal costs change. The marginal costs represent the cost of producing an addition level of output.


Related Discussions:- Explain short run costs

How can trade agreements assist development, How can trade agreements assis...

How can trade agreements assist development? A trade agreement is while two or more countries to by decrease or abolish tariffs, non-trade and quotas barriers which are establ

Method for choosing decision tree tools, Banking on a Beard Award Deci...

Banking on a Beard Award Decision trees are models which allow you to both visualize and quantify a range of possible outcomes when faced with complex choices. These models in

What is meant by the term exception reporting, What is meant by the term ex...

What is meant by the term exception reporting? What are the advantages and the drawbacks of this type of reporting? Exception reports concentrate onto what has not gone as per

Managerial economics, how does economic theory contribute to managerial dec...

how does economic theory contribute to managerial decisions?

Condition of covered interest parity, (a) Suppose that the British Pound is...

(a) Suppose that the British Pound is quoted at $1.4419-36 and the Swiss Franc is quoted at $0.6250-67. What is the direct quote for the British Pound in Zurich? Note that a direct

How does foreign direct investment help development, How does foreign direc...

How does foreign direct investment (FDI) help development? Foreign direct investment (FDI) shows an injection of resources in the economy. When those resources are used to rai

Finacial Fiasco Book Review, Can anyone type me a paper on the book financi...

Can anyone type me a paper on the book financial fiasco? I will provide with a link to the book.

What is poor governance, What is poor governance? In countries along wi...

What is poor governance? In countries along with poor governance: • The rule of law has not working for example civil war and areas run by war lord • Bribery and corrupti

Elasticity, how the concept of elasticity used for policy formulation

how the concept of elasticity used for policy formulation

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd