Market conditions can have a big impact on how companies look at their costs, both now and in the future. Let's break it down simply:

Short-Run Costs:

• Fixed Costs: In the short run, some costs, like rent and equipment, stay the same. These are called fixed costs.
• Variable Costs: When demand changes, costs that can change, like pay for workers or materials, might go up or down.
• Limits on Changes: Companies can only change some things quickly, so they might not always respond to market changes right away.

Long-Run Costs:

• Everything Can Change: In the long run, all costs can change. Companies have more options, like getting new technology, moving to a better location, or increasing or decreasing how much they produce based on market needs.
• Flexibility to Adapt: This ability to change helps companies improve how they make products and lower their overall costs.

To sum it up, how the market is doing can greatly affect how companies handle their costs, both in the short run and the long run!