Flashcards in Short-Run Costs 7.3-1-Marie Smith Deck (12)
What are the costs of production?
Variable cost, fixed cost, average cost, and marginal cost.
What are variable costs?
The cost of hiring the variable input (labor) needed to produce a given amount of output.
What are the two things you need to know to calculate the variable costs for producing a product?
1. You need to know the amount of labor needed to produce a given amount of output. 2. The amount you have to pay to get a unit of labor.
The amount of labor a firm needs to produce a given quantity of output, is what kind of information?
It is technological information about productivity.
How much you have to pay to get a unit of labor, is what kind of information?
It is economic information.
How do you determine variable cost?
# of workers x amount you have to pay 1 worker.
A payment to an employee for labor services.
If it takes 2 workers to produce 20 tvs, and the wage rate is $1000 per week for each worker, what would the variable cost be?
V C= $1000 x 2= $2000 per week
What tells us how much labor we need to produce a given quantity of product?
The total product of the firm.
What is another way of saying; the "labor costs" of producing a given number of units?
The variable cost of producing a given quantity of units.
# of workers x wage paid to those workers = ?
Total amount of money the fim has to spend on labor to produce output.