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microbook_3e-page104 - The short run is a period of time...

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Lecture 7 Short-Run Costs and Output Decisions Eric Doviak Principles of Microeconomics Decisions Facing Firms decisions 1. Quantity of output to supply 2. How to produce that output (which technique to use) 3. Quantity of each input to demand are based on information 1. The price of output 2. Techniques of production available* 3. The price of inputs* * Determines production costs Costs in the Short Run
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Unformatted text preview: The short run is a period of time for which two conditions hold: 1. Firm is operating under a fixed scale (fixed factor) of production and 2. Firms can neither enter nor exit an industry. In the short run, all firms have costs that they must bear regardless of their output. These kinds of costs are called fixed costs. Page 104...
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