Basis Fixed cost Variable cost (1.) Meaning Fixed cost are those cost which do not vary with the lavel of output. Variable cost are the cost which vary with the lavel of output. (2.) Factors of production Fixed cost are the cost incurred on fixed factors of production like land, machine, building etc. Variable cost are incurred on the employment of variable factors such as material labour etc. (3.) Alternative name It is also known as indirect cost.
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Internal economic includes External economic includes Managerial Economies :- Better qualified and specialized managers and workers leads to reduction in operation cost, there by leading to economies. Technical Economics :- when the scale of production increases it is in a position to upgrade its plant and machinery. This enhancement can lead to per unit reduction of cost. Financial Economies :– the credit worthiness enjoyed by the large firm is substantially more than those of small. They are able
Basis Movement along demand Curve Shift in Demand Curve 1. Meaning A rise or fall in quantity demanded die to change in price is called movement along demand curve. Shift in demand is defined as change in quantity demanded due to factors other than price of good. 2. Types of movement/Shifts 1. Extension of demand 2. Contraction of demand 1.Increase in supply curve 2. Decrease in supply 3.Influence/cause It occurs due to change in price. It occurs due
Type of elasticity Numerical value of elasticity Description 1. Perfect inelastic Ep =0 Quantity demanded does not change as price changes. 2. Inelastic Ep< 1 Quantity demanded changes by a smaller percentage than change in price. 3. Unitary elastic Ep=1 Quantity demanded changes at the same rate as change in price. 4. Elastic Ep>1 Quantity demanded changes by a large percentage than change in price. 5. Perfactly elastic Ep =∞ Consumers are ready to buy all they can