Fixed costs are irrelevant in the short run because they cannot vary. The fixed costs will remain the same regardless of the firm’s output. If a firm bought vats and kettles to brew beer and fail to produce one bottle of it, or produces an ocean of it, the costs of the equipment, the fixed costs, remain the same.
The pursuit of Truth continues armed with the ability to think, reason, and always ask "Why?". This site is dedicated to the Spanish Scholastics of the School of Salamanca who helped lay the foundation of free-market economics.
Tuesday, October 28, 2008
Why are fixed costs irrelevant in the short run?
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