Economics 12 Notes for Economics Notes

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Difference between fixed and variable cost

S.No. Fixed cost Variable cost
i. Those cost which are included on fixed factors of production is called fixed cost. Those cost which are included on variable factors of production is called variable cost.
ii. Fixed factors of production are capital equipment, machines, plant, building salary of permanent staff, etc. Variable factors of production are expenses on raw materials, wages and salary for casual workers, running expenses, etc.
iii. Fixed costs do not change with the level of output in short run. Variable cost changes with the changes in output in short run.
iv. It remains same even at zero level of output. Variable cost is zero only if there is no production of output.
v. It remains constant. It changes at different level of production.

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