|
|
LONG-RUN MARGINAL COST CURVE: A graphical representation of the relationship between long-run marginal cost and the quantity of output produced. Like other marginal curves, the long-run marginal cost curve follows the average-marginal rule relative to the long-run average cost curve. In all outward appearance, the long-run marginal cost curve looks very much like the short-run marginal cost, that is, it is U-shaped. However, the U-shape is attributable to returns to scale rather than increasing and decreasing marginal returns.
Visit the GLOSS*arama
|
|
|
|
                           VARIABLE COST: In general, cost that changes with changes in the quantity of output produced. More specifically, variable cost is combined with the adjectives "total" and "average" to indicate the overall level of variable cost or the per unit variable cost. Variable cost depends on the amount produced. If there is no production, then there is no variable cost. Variable cost is cost that depends on the quantity produced. If production is greater, then variable cost is greater. Variable cost is affected by short-run production principles, especially the law of diminishing marginal returns.Variable InputsVariable cost usually includes the cost of using variable inputs, assorted resources that are variable in the short run, especially labor and material inputs. However, in practice, variable cost includes any and all cost that varies with the quantity of output.For example, Waldo's TexMex Taco World operates in the short run with labor (the workers) as a variable input and capital (the restaurant and equipment) as a fixed input. In this case, the cost associated with labor is a prime candidate to be a variable cost. This includes hourly wage payments to the workers and any fringe benefits paid on behalf of the workers. While labor is usually isolated as THE variable input in the short run, most short-run production has other variable inputs, too. Waldo's TexMex Taco World undoubtedly has an assortment of other variable inputs, all of which are part of variable cost--including meat, lettuce, sour cream, and jalapenos that make up the tacos; paper napkins, packaging material, and plastic utensils that customers use when consuming the tacos; and electricity and other energy sources needed to prepare the tacos. When Waldo's make more tacos, they incur a greater cost for these inputs. Total and AverageThe two most common manifestations of variable cost are total variable cost and average variable cost.- Total Variable Cost: This is the total amount of variable cost incurred in the production of a good. It combines all variable opportunity cost.
- Average Variable Cost: This is the per unit variable cost, which is calculated by dividing total variable cost by the quantity of output produced.
Recommended Citation:VARIABLE COST, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2025. [Accessed: July 6, 2025].
Check Out These Related Terms... | | | | | | | | | | | | |
Or For A Little Background... | | | | | | | | | | | | |
And For Further Study... | | | | | | | | | | |
Search Again?
Back to the WEB*pedia
|
|
|
RED AGGRESSERINE
[What's This?]
Today, you are likely to spend a great deal of time at a flea market hoping to buy either a birthday greeting card for your father or a T-shirt commemorating the first day of spring. Be on the lookout for defective microphones.
Your Complete Scope
This isn't me! What am I?
|
|
|
The portrait on the quarter is a more accurate likeness of George Washington than that on the dollar bill.
|
|
|
"Defeat is simply a signal to press onward. " -- Helen Keller, author, lecturer
|
|
FASB
Financial Accounting Standards Board
|
|
|
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.
User Feedback
|
|
