The distinction between Fixed and Variable factors

The distinction between Fixed and Variable factors - The...

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The distinction between Fixed and Variable factors: The distinction between the two types of factors is the basis of cost analysis and the law of returns. If all the factors of production were perfectly divisible and variable, the cost of production would have increased in the exact proportion of the output. As this is not the case, a special cost analysis becomes important.
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Unformatted text preview: The classification of costs can be summarized as follows: Fixed Cost Variable Cost Indivisible large units Divisible small units Supplementary: Even in their absence some amount of production can be carried out. Without these factors no production can be carried out. Plant, machinery, manager, land, factory premises etc. Labor, raw materials, transport, freight etc....
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