🔍The short run is a period in which at least one input is fixed.
💱The long run is the time it takes for all inputs to become variable.
💲Costs incurred by firms can be explicit (monetary) or implicit (opportunity cost).
🏢Fixed costs do not change with output, while variable costs increase with output.
📈Variable costs increase at an increasing rate due to diminishing returns to scale.
What is the short run?
—The short run is the period in which at least one input is fixed for the firm.
What is the long run?
—The long run is the time it takes for all inputs to become variable for the firm.
What are explicit costs?
—Explicit costs are costs that require a monetary payment, such as raw material costs.
What are implicit costs?
—Implicit costs are costs that do not require a monetary payment, such as opportunity costs.
How do fixed and variable costs differ?
—Fixed costs do not change with output, while variable costs increase with output.
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00:05The short run is a period in which at least one input is fixed for the firm.
00:25The long run is the time it takes for all inputs to become variable for the firm.
00:38Costs incurred by firms can be explicit (monetary) or implicit (opportunity cost).
01:20Fixed costs do not change with output, while variable costs increase with output.
02:41Variable costs increase at an increasing rate due to diminishing returns to scale.
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