Types Of Cost, Revenue And Profit, Short Run And Long Run Production
Economics notes
Types Of Cost, Revenue And Profit, Short Run And Long Run Production
➡️ Cost-benefit analysis is a method used to evaluate the economic efficiency of a decision by comparing the costs and benefits associated with it.
➡️ It involves quantifying the costs and benefits of a decision in monetary terms, and then calculating the net present value (NPV) of the decision.
➡️ NPV is the difference between the present value of the benefits and the present value of the costs. If the NPV is positive, the decision is economically efficient; if it is negative, the decision is not economically efficient.
What are the different types of costs in economics?
There are three types of costs in economics fixed costs, variable costs, and total costs. Fixed costs are expenses that do not change with the level of production, such as rent or salaries. Variable costs are expenses that increase or decrease with the level of production, such as raw materials or labor. Total costs are the sum of fixed and variable costs.
What is the difference between revenue and profit?
Revenue is the total amount of money a company earns from selling its products or services. Profit, on the other hand, is the amount of money a company earns after deducting all of its expenses from its revenue. In other words, profit is the money left over after all costs have been paid.
What is the difference between short run and long run production?
Short run production refers to the period of time during which at least one input is fixed, while others can be varied. For example, a company may have a fixed amount of capital, but can vary the amount of labor it uses. Long run production, on the other hand, refers to the period of time during which all inputs can be varied. In the long run, a company can adjust its capital, labor, and other inputs to optimize its production process.