Flip It Cost Analysis Notes - \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf \u25cf Variable costs the costs of inputs that change as

Flip It Cost Analysis Notes - u25cf u25cf u25cf u25cf...

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Variable costs - the costs of inputs that change as the output changes are called variable costsFixed costs - the costs of inputs that do not change as the output changesWhat classifies an input as variable or fixed depends on the time period consideredTotal cost = fixed cost + variable costShort run - For a short period such as a day or a week, the costs of certain inputs are fixedTotal costs for the firm are the sum of both variable costs and fixed costsIf we consider a longer period, such as a year, then all input costs would be variable costs because any input can be changed. This period is called the long runTotal costs for the firm in the long run are equal to the variable costsSunk cost - a cost that can’t be recovered once spentThe total cost of production is the sum of variable and fixed costsMarginal cost of production- measures how total cost increases as the firm produces one more unit of output

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