IB Economics Costs

What is short run?

• The short run is when at least one input is fixed while others are variable

• The short run is a concept that states that you will be able to change your plans

• The short run is when you can change capital and labour and any factor of production

Salary given to permanent staff is an example of which kind of cost

• fixed cost

• variable cost

A person using his own capital in business is an e.g of

• implicit cost

• explicit cost

Opportunity costs are

• the loss of potential gain from other alternatives when one alternative is chosen

• marginal costs when average costs are minimized

• what accountants consider as costs

• explicit costs

The best definition for fixed costs is

• Costs that do not depend on the level of production

• Costs that do not change

• Costs that increase when you produce more

Types of cost in the curve are

• Total, variable and fixed

• Average and marginal

Cost per unit of output is

• AC

• MC

Marginal costs is

• the cost added by producing one additional unit

• the change in revenue added by producing one additional unit

• the additional cost

The shape of Marginal cost is

• It first decreases as units increase, then increase

• It increases constantly as units increase

• It increases as units increase, then it decreases

The formula for marginal costs is

• Percentage change in costs divided by percentage change in quantities

• Change in costs divided by change in quantities

• Percentage change in costs divided by percentage change in prices