Answer:

Variable Costs in the Short Run and Long Run

Variable costs exist in both the short run and long run, and are costs that are dependent upon the output of the business. In the short run, variable costs are the costs of labour, raw materials, and other direct costs of production. In the long run, these costs include labour, raw materials, and other costs that can be adjusted over time, such as rent and utilities.

Short Run Variable Costs

In the short run, variable costs are the costs of labour, raw materials, and other direct costs of production. These costs are determined by the output of the business, and can be adjusted if output changes. For example, if a business increases its output, then it will need to purchase more raw materials, and employ more labour, resulting in an increase in variable costs.

Long Run Variable Costs

In the long run, variable costs are those costs that can be adjusted over time, such as rent and utilities. These costs can be changed depending on the output of the business, and can be adjusted if output changes. For example, if a business increases its output, then it may need to rent a larger space in order to accommodate the increased production, resulting in an increase in variable costs.

Fixed Costs

Fixed costs are costs that are not dependent upon the output of the business. These costs include rent, utilities, insurance, and other costs that remain the same regardless of output. These costs are not affected by a business’s output, and therefore do not change in the short run or long run.

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