Economics Year 13 revision Day 1 - Fixed, Variable and Total Costs
Our Year 13 Recap kicks off with a review of some of the main production costs that producers incur over time and why they matter for a business.
Production costs represent the total expenses that are incurred from producing goods and services over time. There are two different forms of production costs for a producer. Fixed costs represent the costs that do not change with output and relate to the core infrastructure of the business. Variable costs represent the costs that vary with output over time such as wages and raw materials. When aggregated together, across different output levels, this defines the total costs of production that the business faces. To understand and evaluate the market outcomes under different market structures, you need to be comfortable with what these costs represent.
Here Jacob guides you through the production costs revision slide: