Production Cost

Variable costs change according to the quantity of goods produced; fixed costs are independent of the quantity of goods being produced.

Marginal cost is the change in total cost when another unit is produced; average cost is the total cost divided by the number of goods produced.

Long run costs have no fixed factors of production, while short run costs have fixed factors and variables that impact production.

Increasing, constant, and diminishing returns to scale describe how quickly output rises as inputs increase.

The economic cost is based on the cost of the alternative chosen and the benefit that the best alternative would have provided if chosen.