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RECESSIONARY GAP, KEYNESIAN MODEL: The difference between equilibrium aggregate production achieved in the Keynesian model and full-employment aggregate production that occurs when equilibrium aggregate production is less than full-employment aggregate production. A recessionary gap, also termed a contractionary gap, is associated with a business-cycle contraction. The prescribed Keynesian remedy for a recessionary gap is expansionary fiscal policy. This is one of two alternative output gaps that can occur when equilibrium generates production that differs from full employment. The other is an inflationary gap.
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                           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, 2000-2026. [Accessed: January 15, 2026].
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BROWN PRAGMATOX
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Today, you are likely to spend a great deal of time going from convenience store to convenience store seeking to buy either a pleather CD case or a how-to book on fine dining. Be on the lookout for strangers with large satchels of used undergarments.
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The first U.S. fire insurance company was established by Benjamin Franklin in 1752 in Philadelphia.
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"My philosophy of life is that if we make up our mind what we are going to make of our lives, then work hard toward that goal, we never lose - somehow we win out." -- President Ronald Reagan
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P/E
Price-Earnings Ratio
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