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PrinsipMikroekonomi

PrinsipMikroekonomi

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Published by cantona78

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Published by: cantona78 on Mar 13, 2011
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01/15/2016

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Do you still remember about short-run production you have learned in Topic 5?

We know that short-run production involves the use of fixed inputs and variable

inputs. The cost that is related to fixed inputs is referred to as fixed cost, while

cost related to variable inputs is the variable cost. Now, let us look at the

definition of fixed costs and variable costs.

When we only use two types of inputs in the short-run, that is, capital as the

fixed input and labour as the variable input, hence, rental for capital is the fixed

cost and payment of wage for labour is the variable cost.

6.2

Variable costs are costs that change along with the change in output.

Fixed costs are costs that do not change according to change in output.

Determine whether these statment are TRUE (T) or FALSE (F).

1. Economic cost of a firm is the payment that has to be made to the
owner of input to draw input from alternative usage.

2. For the owner of a firm, the cost of using own input in business is the
implicit cost, while the cost for purchase of market input is the
explicit cost.

EXERCISE 6.1

Give three examples of implicit costs. Discuss the matter with your

friends to broaden your knowledge.

ACTIVITY 6.2

TOPIC 6 COST THEORY 147

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