Production costs are very important when it comes to how much of a product is available in the market.
When these costs go up, producers might make less of their product. This means that the supply curve, which shows how much can be produced, shifts to the left.
On the other hand, if production costs go down, producers can create more. This causes the supply curve to shift to the right.
Fixed Costs: These are costs that stay the same, no matter how much a product is made. An example is rent for a building.
Variable Costs: These costs change based on how much is produced. For example, the cost of raw materials goes up when more products are made.
Short-Run: In the short run, some costs remain fixed, which means producers can only change variable costs. For instance, a bakery still has to pay the same rent no matter how many cakes it bakes.
Long-Run: In the long run, all costs can change. This means a company can invest in new machines or technology to lower their costs. With lower costs, they can make more products.
In simple terms, when production costs change, it directly affects how much of a product is available in the market!
Production costs are very important when it comes to how much of a product is available in the market.
When these costs go up, producers might make less of their product. This means that the supply curve, which shows how much can be produced, shifts to the left.
On the other hand, if production costs go down, producers can create more. This causes the supply curve to shift to the right.
Fixed Costs: These are costs that stay the same, no matter how much a product is made. An example is rent for a building.
Variable Costs: These costs change based on how much is produced. For example, the cost of raw materials goes up when more products are made.
Short-Run: In the short run, some costs remain fixed, which means producers can only change variable costs. For instance, a bakery still has to pay the same rent no matter how many cakes it bakes.
Long-Run: In the long run, all costs can change. This means a company can invest in new machines or technology to lower their costs. With lower costs, they can make more products.
In simple terms, when production costs change, it directly affects how much of a product is available in the market!