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.