Economics Short Run Vs Long Run Costs Questions
Variable costs in the short run refer to expenses that change in direct proportion to the level of production or output. These costs are not fixed and can fluctuate based on factors such as the quantity of raw materials used, labor hours, or energy consumption. In the short run, businesses have limited flexibility to adjust variable costs as they are often tied to immediate production needs. Examples of variable costs include wages for hourly workers, raw material costs, and utility expenses.