Flashcards in Short Run Costs 7.3-1&2 ~ Benjamin Rainwater Deck (12)
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1
Variable costs (VC) are
costs that change with the amount of output being produced.
2
To calculate the variable costs (VC) for
producing a product, you need two pieces of
information. What is the first one?
1. the amount of labor needed to produce a
given amount of output
3
To calculate the variable costs (VC) for
producing a product, you need two pieces of
information. What is the second one?
2. the wage that you have to pay to get that
amount of labor
4
Wage is
a payment to an employee for labor services.
5
VC=
Labor x number of employees
6
Variable costs (VC) can be graphed by plotting
ariable cost and different outputs on a
two-dimensional graph.
7
Inefficient points are excluded/included from the graph
excluded
8
inefficient points are
those in which
additional workers cause total product to fall.
9
At some point the VC curve starts going
backward. What are the points that are receding on the x axis?
Inefficient Points
10
At the maximum output, you extend the
VC curve
vertically to represent that that was the maximum output.
11
The Variable Cost curve is (?) shaped
S
12
