Production costs in the short run at the bakery. Dynamics of costs in the short and long term. Production costs in the long run

When analyzing the work of an enterprise, changes in production costs and changes in the supply of a product, a distinction is made between short-term and long-term periods of its work. Short-term period of operation of the enterprise- this is such a period of time during which it is impossible to change production capacities. During this period, they are constant, and it is possible to change production volumes only by changing the intensity of their use. Long term characterized by a change production capacity and, consequently, a change in the amount of occupied resources.

The total cost of production mainly depends on two factors: the technology used and the price of different kinds resources. AT current total costs distinguish between fixed and variable costs.

Fixed costs of production are those that do not depend on the size of the product produced. These may include rent, depreciation, land tax, property tax, heating costs, etc.; regardless of the volume of production, these amounts remain constant. variable costs- these are those that change along with changes in production volumes (costs of materials, raw materials, energy, transport, labor, etc.). On the graph, this can be reflected in the following way (Fig. 7.1).

Rice. 7.1.

The fixed cost curve (FC) shows that they do not change with the volume of production (Q), so it runs parallel to the horizontal axis. Curve variable costs(VC) shows an increase in variable costs along with an increase in production volumes.

Within a short period of time, a firm can combine fixed capacities with varying amounts of resources used. How does the volume of production change in this case? AT general view the answer to this question is law of diminishing returns or, as it is also called, law of diminishing marginal product: from a certain moment, the successive connection of a variable resource to a constant gives a decreasing additional or marginal product per each subsequent unit of the attached variable resource. This also affects the consistent increase in variable production costs: it is not the same for the production of each additional unit of output.

The sum of fixed and variable costs is total production costs. There is a significant difference between the component parts that form the total costs, which is used in entrepreneurial activity. variable costs- these are the costs that the entrepreneur can manage, their value can be changed due to changes in production volumes. fixed costs are outside the control of the company. Such costs are obligatory for payment irrespective of production volumes.

In addition to the total costs of production, it is important for the entrepreneur to know what the average costs are, that is, the costs per unit of production. In average costs, one also distinguishes average fixed and average variable costs of production.

marginal cost called the additional cost associated with the production of one more unit of output. These costs can be controlled, increased or decreased. The value of marginal cost is related to the marginal productivity of labor. Their relationship is reflected in following rule: the marginal cost of producing each additional unit of output will decrease as long as the marginal productivity of each additional variable resource increases.

At present, the importance of transaction costs- the costs of the firm in preparing and conducting market transactions and agreements, i.e., the costs associated with changing forms of value and with the exchange of property rights. They include the costs of searching for information, the losses caused by incomplete information, the costs of negotiating, concluding agreements, monitoring their implementation, as well as all the costs of protecting property rights and losses from unreliable protection. Distinguish market transaction costs (or external), i.e. the costs of organizing market relations, and non-market (or internal), i.e. costs associated with planning, monitoring the implementation of tasks and obligations, fixed and variable transaction costs etc. All of them are very difficult to measure, but the general trend is clear - they grow along with the development and complexity of market relations, and at the moment, according to the most rough estimates in developed countries, they account for about 60% of GNP. Therefore, reducing transaction costs is one of the main ways to improve the efficiency of the company. These costs can be reduced by increasing the size of the firm. The firm can expand until the cost of organizing an additional transaction within the firm is equal to the cost of carrying out the same transaction through the market or through another firm. Depriving consumers of the opportunity to choose, the development of “directorial ethics” (business and informal contacts of managers), and a general increase in the degree of institutionalization of the economy also contribute to a decrease in transaction costs.

CLASSIFICATION OF COSTS can be carried out taking into account mobility production factors. Based on this approach, fixed, variable and general (cumulative) costs are distinguished.

In the short term, some costs cannot be changed, so the company increases output by using fixed and variable production resources.

Fixed Costs (FC) Any cost in the short run that does not change with the level of production. For example, in late October and early November 2002, AvtoVAZ did not operate in Russia due to excess production of cars, but the plant continued to incur fixed costs, i.e. it was obliged to pay interest on loans, insurance premiums, property taxes, pay salaries for cleaners and caretakers, and make utility bills.

Despite the absence of a connection between production volumes and fixed costs, the influence of the latter on production does not stop, since they predetermine the technical and technological level of production.

To fixed costs relate:

a) expenses for the maintenance of industrial buildings, machinery, equipment;
b) rent payments;
c) insurance premiums;
d) salaries to senior management personnel and future specialists of the enterprise.

All these expenses must be financed even when the enterprise does not produce anything.

The division of costs into fixed and variable is the starting point in the division of short-term and long-term periods. In the long run, all costs are variable because, for example, equipment may be replaced or a new plant may be acquired. The specified periods may not be the same for all industries. Thus, in light industry, it is possible to increase production capacity within a few days, while in heavy industry it may take several years.

Variable Costs (VC)- costs, the value of which varies depending on the change in the volume of output. If no product is produced, then variable costs are zero.

Variable costs include:

a) the cost of raw materials, materials, fuel, energy, transport services;
b) the cost of wages workers and employees, etc.

In supermarkets, the payment for supervisory employees is a variable cost because managers can adjust the amount of these services to the number of customers.

Variable costs at the beginning of the growth of production volume increase for some time at a slowing pace, then they begin to increase at an increasing rate per each subsequent unit of output. Western economists explain this situation by the action of the so-called law of diminishing returns. Variable costs are manageable. An entrepreneur, in order to determine how much to produce, must know how much variable costs will increase with the planned increase in output.

Gross (general, total) costs (TC) the sum of fixed and variable costs incurred by the enterprise for the production of goods. In the short run, gross costs depend on the volume of output. Gross costs are determined by the formula:

Gross costs increase as output increases.

The costs per unit of goods produced are in the form of average fixed costs, average variable costs, and average gross (total, total costs).

Average fixed costs (AFC) is the total fixed cost per unit of output. They are determined by dividing fixed costs (FC) by the corresponding quantity (volume) of output:

Since total fixed costs do not change, when divided by an increasing volume of production, average fixed costs will fall as the quantity of output increases, since a fixed amount of costs is distributed over more and more units of production. Conversely, if output decreases, average fixed costs will rise.

Average Variable Cost (AVC) is the total variable cost per unit of output. They are determined by dividing the variable costs by the corresponding quantity (volume) of output:

Average variable costs first fall, reaching their minimum, then begin to rise.

Average (total) costs (ATS) is the total cost of production per unit of output. They are defined in two ways:

a) by dividing the sum of total costs by the quantity of goods produced;

b) by summing average fixed costs and average variable costs:

ATC = AFC + AVC.

Initially, the average (total) cost is high because the output is small and the fixed costs are high. As the volume of production increases, average (total) costs decrease and reach a minimum, and then begin to rise.

Marginal Cost (MC) is the cost of producing an additional unit of output.

Marginal cost is equal to the change in total costs divided by the change in the volume of output, that is, they reflect the change in costs depending on the amount of output. Since fixed costs do not change, fixed marginal costs are always zero, i.e. MFC = 0. Therefore, marginal costs are always marginal variable costs, i.e. MVC = MC. It follows from this that increasing returns to variable factors reduce marginal costs, while falling returns, on the contrary, increase them.

Marginal cost shows the amount of costs that the firm will incur if the production of the last unit of output increases, or the money that it saves if production decreases by this unit. When the incremental cost of producing each additional unit of output is less than the average cost of the units already produced, the production of that next unit will lower the average total cost. If the cost of the next additional unit is higher than the average cost, its production will increase the average total cost. The foregoing refers to a short period.

In the process of producing goods and services, living and past labor is expended. At the same time, each company seeks to obtain the highest possible profit from its activities. To do this, each company has two ways: to try to sell its product at the highest possible price, or to try to reduce its production costs, i.e. production costs.

Depending on the time spent on changing the amount of resources used in production, there are short-term and long-term periods in the activities of the company.

Short-term is the time interval during which it is impossible to resize manufacturing enterprise, owned by the company, i.e. amount fixed costs carried out by this company. Over a short-term time interval, changes in output volumes can result solely from changes in the volumes variable costs. It can influence the course and effectiveness of production only by changing the intensity of the use of its capacities.

During this period, the company can quickly change its variable factors - the amount of labor, raw materials, auxiliary materials, fuel.

In the short run, the quantity of some production factors remains unchanged, while the quantity of others changes. Costs in this period are divided into fixed and variable.

This is due to the fact that the provision of fixed costs is determined by fixed costs.

fixed costs. Fixed costs got their name because of their nature of immutability and independence from changes in the volume of production.

However, they are classified as current costs, because their burden lies on the firm daily if it continues to rent or own the production facilities it needs to continue its production activities. When these current costs take the form of periodic payments, they are explicit monetary fixed costs. If they reflect the opportunity costs associated with owning one or another production facility acquired by the firm, they are implicit costs. On the graph, fixed costs are depicted by a horizontal line parallel to the x-axis (Fig. 1).

Rice. 1. Fixed costs

Fixed costs include: 1) labor costs management personnel; 2) rent payments; 3) insurance premiums; 4) deductions for depreciation of buildings and equipment.

variable costs

In addition to fixed costs, firms also incur variable costs (Fig. 2.). Variable costs can quickly change within an enterprise of a given size as output changes. raw materials, energy, hourly payment labor are examples of the variable costs of most firms. It depends on the specific situation which costs are fixed and which are variable.

Fig 2. Variable costs

The value of production costs depends on the value of the cost of economic resources. Somewhat conditionally, all resources used in production can be divided into two large groups: resources, the value of which can be changed very quickly (for example, the cost of raw materials, materials, energy, hiring labor, etc.) and resources that change the volume of use which is possible only for a sufficiently long period of time (construction of a new production facility).

Based on these circumstances, cost analysis is usually carried out in two time periods: in short term(when the amount of a certain resource remains constant, but the volume of production can be changed by using more or less of such resources as labor, raw materials, materials, etc.) and in long term(when you can change the amount of any resource used in production).

The difference between the short run and the long run exactly corresponds to the difference between fixed and variable factors of production. Variable factors of production- factors of production, the number of which can be changed within a short period (for example, the number of employees). Fixed factors of production- factors, the costs of which are given and cannot be changed within a short period (for example, production capacities). Thus, in the short run, the entrepreneur uses both fixed and variable factors of production. In the long run, all factors of production are variable.

Analysis of production costs in the short run assumes that the amount of some resource (for example, production capacity) cannot change, but only the amount of some other individual resource changes. As a result, the question arises: how will the quantity of output change if one resource (capacity) is unchanged and the other (labor costs) is variable, i.e., what will be the dynamics of production volume with a combination of constant and variable factors of production? The answer to this question is law of diminishing marginal returns (productivity): starting from a certain point in time, successive additions of the same units of a variable resource (for example, labor) to a constant one (for example, production capacity) gives a decreasing return in the form of a decrease in the additional or marginal product per each subsequent unit of the variable resource.

To illustrate the operation of this law, it is necessary to introduce new indicators into the analysis. total product(TP or Q x) - total volume finished products produced by the firm over a given period of time. Average product(ATR) (average resource productivity) - the ratio of the total volume of output (TP) to the used volume of this resource (in our case, labor):

where Q R is the volume of the variable resource involved in the production.

Marginal resource product (MP) (marginal productivity)- an additional product obtained through involvement in manufacturing process each next unit of this factor, i.e. this indicator gives us information about how the total output will change when the amount of the variable resource changes by one unit. Marginal product is equal to the change in total output divided by the change in the amount of resource used:

The continuous marginal product can be mathematically defined as the first derivative of the total product function, i.e. MP=TP".

Note. From the course of algebra, it is known that the derivative of any function y \u003d f (x) is the limit of the increment ratio of the function ( ? y) to the argument increment ( ? x) as the latter tends to zero:

If the additional units of the variable resource are small enough compared to the total, then mp can be defined as the derivative of the total product function. The latter, in turn, is a function of one variable and one constant resource. Thus MP = dTP(Q R) / dQR. Becausethe derivative of the function shows the rate of change of the function itself, then MP reflects the rate of change in the total volume of production of goods (Q x ) when changing the amount of a variable resource.

The curve of total product (TP) in the figure below will show the relationship between “costs and a variable factor of production (labor) and the final volume of goods produced. The average labor product (ATP) curve shows how much output a firm receives per unit of variable resource used. The higher average product resource, the more output the firm receives per unit of resource. The marginal product curve (MP) will show how much additional output a firm receives by attracting an additional unit of a variable resource.

From the presented graphical information, we can conclude that after the involvement of Q 1 units of a variable resource in the process of creating products, the additional product (mp) begins to decline, and the growth of total production (tp) slows down. As soon as the indicator of the total product (tp) reaches its maximum level, the marginal return of each subsequent unit of the variable resource begins to take on the values less than zero, which causes the subsequent negative dynamics of the output volume indicator.

The general patterns due to the action of the principle of diminishing marginal returns make it possible to distinguish three areas in the figure:

region of increasing marginal returns(1) - the law of diminishing marginal returns does not work yet. The mp indicator has a positive trend, while the tp indicator is growing at an accelerating pace;

area of ​​diminishing marginal returns(2) - here the marginal productivity of each next unit of the variable resource is lower than the marginal productivity of each previous one. In the area of ​​diminishing marginal returns, the total volume of production is still growing, but at an ever slower rate, reaching its maximum;

region of negative marginal returns(3) - in this section, the marginal productivity of each next unit of the variable resource not only decreases, but also takes on negative values. In this case, the TP indicator, having overcome the maximum point, begins to decrease. Note that total product reaches its maximum when marginal product is zero. In the considered example, we observe such a situation when using Q 2 units of the variable factor of production.

The law of diminishing marginal returns applies to all kinds of variable factors of production in all industries. With the gradual introduction of additional units of a variable resource into production, provided that all other resources are constant, the marginal return of this resource first grows rapidly, and then begins to decline down to negative values.

Having formulated the law of diminishing marginal returns, we return to the problem of analyzing production costs. Practice
indicates that the value of costs will somehow depend on the volume of output. In the short term, there are:

fixed costs(TFC), the value of which does not depend on the volume of output (depreciation, interest on a bank loan, rent, maintenance of the administrative apparatus, etc.). We are talking about the cost of resources related to fixed factors of production. The value of these costs is not related to production volumes. Fixed costs exist even when the production activity at the enterprise is suspended, and the volume of production is zero. An enterprise can avoid these costs only by completely ceasing its activities;

variable costs(TVC), the value of which varies depending on the change in the volume of production (the cost of raw materials, materials, fuel, energy, wages of workers, etc.). We are talking about the cost of resources related to the variable factors of production. With the expansion of production, variable costs will increase, since the company will need more raw materials, workers, etc. If the company stops production and the output (Q x) reaches zero, then variable costs will be reduced to almost zero, while how fixed costs remain unchanged. The distinction between fixed and variable costs is essential for every businessman: variable costs are within his control, fixed costs are out of the control of the administration and must be paid regardless of the volume of production, even if production is suspended.

So, as output increases while fixed costs remain the same, variable costs increase.

However, at the beginning of the process of increasing output, variable costs will increase slowly for some time. Then variable costs will begin to rise at an accelerating rate. This can be illustrated graphically in the figure below.

Since the fixed cost indicator remains unchanged at all levels of production, including zero, the fixed cost graph is a line parallel to the x-axis. The variable cost graph is an ascending line that can be divided into two sections. The first of them is characterized by a slight increase in costs, while the second is more noticeable. This behavior of variable costs is due to the existence of the law of diminishing marginal returns. As long as we have the marginal product (mp) of each subsequent unit of the variable resource, tvc increases, but at an insignificant rate. As soon as mp begins to decrease, due to the law of diminishing marginal productivity, variable costs begin to rise rapidly, since an increasing amount of a variable resource will be required to produce each subsequent unit of output.

In addition to fixed and variable costs in the short run, there is another type of cost - gross(cumulative, summary, general). Gross costs (TC) - the sum of fixed and variable costs calculated for each given volume of production: TC = TFC + TVC. Since TFC are equal to some constant, the dynamics of gross costs will depend on the behavior of TVC, i.e., will be determined by the law of diminishing marginal productivity.

To get the gross cost curve, it is necessary to sum the graphs of fixed and variable costs - shift the tvc graph up along the y-axis by the value of TFC, which is unchanged for any Q x (see figure).

In addition to gross costs, the entrepreneur is interested in unit costs, since it is these that he will compare with the price of the goods in order to get an idea of ​​​​the profitability of the company. The cost per unit of output is called average. This group of costs includes:

average fixed costs(AFC) - fixed costs calculated per unit of production:

average variable costs(AVC) - variable costs per unit of output:

average cumulative(total, gross, general) costs (ATS) - total costs per unit of production:

The graph of average fixed costs is represented by a hyperbola (figure below). The graph of average variable costs is an irregular parabola with branches up. This curve has two segments. On the first - AVC decrease, on the second - increase. Such dynamics of average variable costs is associated with the operation of the law of diminishing marginal returns. As long as the return on each successive unit of a variable resource increases (the area of ​​increasing marginal returns in the figure below), average variable costs fall. As production increases, the additional product begins to decline - the marginal return of each subsequent unit of a variable resource falls - therefore, to further increase production, an increasing amount of variable resources is required, and average variable costs AVC increase. The graph of average total costs is obtained by vertical summation of two curves - AFC and AVC. In this regard, the dynamics of ATS will be associated with the dynamics of average fixed and average variable costs. While both are decreasing, ATCs are falling, but when, as output increases, the increase in variable costs begins to overtake the fall in fixed costs, ATCs begin to increase.

For the manufacturer, it is of considerable importance how the costs of the firm change with the release of an additional unit of output. This can be determined using the marginal cost indicator. Marginal Cost (MC)- additional costs necessary for the production of each subsequent unit of output:

It should be taken into account that marginal costs largely depend on variable costs, therefore, similarly to the situation with variable costs, as well as with average variable and average total costs, two segments are distinguished on the MC graph: a segment with negative and a segment with positive dynamics, which is also explained by the existence of the law diminishing marginal returns. The next feature of the marginal cost graph is that it intersects the average variable and average total cost graphs at their low points (A and B). This situation is explained as follows: MC is inherently variable, and this type of cost is closely related to average variable costs. As soon as marginal costs become greater than the average variables, the latter immediately begin to increase. Therefore, the intersection point of the MC and AVC graphs can only be the lower point of the irregular parabola of average variable costs. The explanation for the relationship between MS and ATS is similar. While the marginal costs do not exceed the average total costs, the latter are reduced, but if the ratio between them is characterized by the inequality MC\u003e ATC, the average gross costs have a positive trend. In this regard, the point of intersection of the two curves - MC and ATC - will be the minimum point of the graph of average total costs.

Cost reduction is one of the most important sources of increasing the competitiveness of any enterprise. After all, at existing market prices for products, cost reduction means additional profit, and hence prosperity for any manufacturer. When the level of costs changes for any reason, the cost schedules shift. In the case of a decrease in costs, the corresponding graphs are shifted down, with an increase in costs, the graphs are shifted up along the y-axis.

Production costs, their essence and classification

At the heart of any economic decision lies the answer to the question: how to correlate what is spent on a particular project (costs) and what can be obtained as a result of the project in excess of the costs incurred (profit). Before deciding how much to produce, a firm must analyze costs.

Costs is the payment for the acquired factors of production. All costs can be divided into two groups: explicit and implicit. Explicit Costs are cash payments to suppliers of factors of production. These costs are fully reflected in the accounting of the enterprise, therefore they are also called accounting costs. Implicit costs are the opportunity costs of using the resources owned by the firm. opportunity cost production of goods and services is measured by the value of the largest lost opportunity used to create factors of production. They can also act as the difference between the profit that could be obtained with the most profitable use of resources, and the profit actually received. However, not all costs (monetary and non-monetary) act as opportunity costs. In any way of using resources, the costs that the manufacturer necessarily bears (the cost of renting the premises, the costs associated with registering an enterprise, etc.) are not considered opportunity costs. These non-opportunity costs do not participate in the process of economic choice. Explicit and implicit costs add up to economic costs. However, not all costs incurred by the enterprise are included in accounting costs, since part of the costs is incurred by the enterprise at the expense of profits (profit tax, bonuses paid by the enterprise from profits, material assistance to employees, etc.).

Similarly to costs, profit can also be accounting and economic.

Accounting Profit is the difference between revenue received and accounting explicit costs. Economic profit is less than accounting by the amount of implicit costs.

The relationship between accounting and economic profit is as follows:

All economic costs can also be divided into two groups: fixed and variable. Permanent Costs are economic costs that do not change with changes in output. They do not depend on the amount of output, and the enterprise will bear them even if it does not produce anything at all (for example, maintenance and management costs). Variables costs are economic costs that depend on the volume of production (for example, the cost of variable resources). The sum of fixed and variable costs gives gross costs.

Production costs, regardless of their type, determine the costs of production elements and the costs of a combination of production elements. Relationship between output and minimum necessary costs on its production is described by the cost function associated with the production function. The production function characterizes the relationship between the maximum possible output (Q) and the amount of labor involved (3TR) and capital (K). Traditionally, a two-factor production function is used, which has the form:

Graphic form production function serves as an isoquant, which shows various options for using any two costs, the combination of which will bring a given volume of production (Fig. 10.1). A series of isoquants that reflects the maximum achievable output for any given set of factors of production can be represented as an isoquant map.

Rice. 10.1. Isoquant map.

essence isoquant maps is that the slope of the isoquant corresponds to the marginal rate of technical replacement of one resource by another. The farther the isoquant is from the origin of coordinates, the greater the volume of output it corresponds to.

Production costs in the short run

To determine the degree of influence of each type of resource on the dynamics of output, the analysis of the production function in time periods is used. The main criterion for selecting time periods is the speed with which the resources involved in production can change their quantitative and qualitative composition. Allocate instant, short-term and long-term periods.

AT instant period, all costs are constant, since the product is put on the market and therefore it is no longer possible to change either the volume of its production or its costs.

AT short term period there is a division of costs into fixed and variable. Variable costs in the short term include cash costs for the purchase of raw materials, materials, labor costs for workers, etc. Fixed costs in the short term include: labor costs of the management apparatus, rent, depreciation of fixed assets.

AT long term the company has the opportunity to purchase not only more raw materials, materials or increase the number of jobs in the enterprise, but also to make capital investments. Therefore, it is assumed that in the long run all costs are variable.

Let us consider in more detail the short-term period of the enterprise. In the short run, fixed costs do not change in response to changes in output. The dependence of the dynamics of fixed and variable costs on the change in the volume of output is graphically presented in fig. 10.2 and 10.3.

Rice. 10.2. Fixed costs.

Rice. 10.3. variable costs.

Fixed and variable costs add up to the total, or gross, cost of production. Graphically, the dependence of total costs on the dynamics of output can be shown by superimposing graphs of fixed and variable costs (Fig. 10.4).

Rice. 10.4. General costs.

To measure the costs of production, the categories of average total, average fixed and average variable production costs are used.

Average general costs are equal to the quotient of dividing total costs by the quantity of goods produced.

Average constants costs are determined by dividing total fixed costs by the quantity of output produced.

Average variables costs are determined by dividing total variable costs by the quantity of output produced.

Average cost is important in determining the profitability of a firm: if price equals average cost, then there is no profit. If the price is greater than them, then the company has a profit in the amount of this difference, if it is less, the company incurs losses and may go bankrupt.

To determine the maximum output that a firm can produce, calculate marginal costs. This is the additional cost of producing each additional unit of output compared to the volume of output. Marginal cost is important for determining the strategy of the firm's behavior.

As you can see, all changes in the short run are associated with variable costs. The response of output to a change in variable costs is determined by law of diminishing marginal productivity, which says: an increase in the cost of a variable factor from a certain moment gives an ever smaller increase in the volume of output.

Thus, within the short-term period of the firm's activity, its production capacity is considered to be fixed. It can use its capacity more or less intensively, but the time available to it is not enough to change the size of the enterprise, so in the short run costs are divided into fixed and variable.

Production costs in the long run

In the long run, all costs act as variables, since the volumes of not only fixed, but also variable costs can change over a long-term time interval. The analysis of the long-term time interval is carried out on the basis of long-term average and marginal costs.

Long run average cost- this is the cost per unit of output, which can be changed in an optimal way. A feature of the change in long-term average costs is their initial decrease with the expansion of production capacity and growth in production volume. However, the commissioning of large capacities ultimately leads to an increase in long-term average costs. The long-run average cost curve on the graph goes around all possible short-run cost curves, touching each of them, but not crossing them. This curve shows the lowest long-run average cost of production for each output when all factors are variable. Each short-run average cost curve corresponds to an enterprise that is larger than the previous one. A change in long-run average costs implies a change in the scale of production. These changes are associated with the concept "scale effect". Scale effects can be positive, negative or permanent.

Positive economies of scale(economy of scale) arises from such an organization of production, when long-term average costs decrease as the volume of output increases. Such an organization of production is possible only under the condition of specialization of production and management. Large-scale production makes it possible to use the labor of management specialists more rationally due to a deeper specialization of production and management. Another important condition for economies of scale is the use of efficient technology.

Cause negative economies of scale serves as a violation of the controllability of excessively large-scale production. Under these conditions, long-run average costs rise as output increases.

In conditions where long-term average costs do not depend on the volume of output, there is constant economies of scale.

Long run marginal cost associated with the production of an additional unit of output, when it is possible to change all factors of production in an optimal way. The change in marginal cost can be represented graphically as long run marginal cost curve(Fig. 10.5).

Rice. 10.5. Curve of average costs in the long run.

This curve shows the increase in costs associated with the production of an additional unit of output when all factors of production are variable. Short-run marginal cost curves, which correspond to any fixed production, will be lower than the long-run marginal cost curve for low output, but higher for high output, where diminishing returns are significant. The long run marginal cost curve will rise more slowly than the short run marginal cost curves of any given industry. This is explained by the fact that all types of costs in the long run are variable and diminishing returns are less significant. The long run marginal cost curve intersects the long run average cost curve at a minimum point.

Thus, the long-term period for the firm is sufficient for the firm to have time to change the amount of all resources used, including the size of the enterprise. Therefore, all costs in the long run are considered variable.

1. Production costs are divided into explicit and implicit (alternative). Explicit ones are cash payments to suppliers of factors of production. These costs are fully reflected in the accounting of the enterprise, so they are also called accounting costs.

Implicit costs are the opportunity costs of using the resources owned by the firm. The opportunity cost of producing goods and services is measured by the value of the greatest lost opportunity used to create their factors of production.

2. In the short term, there is a division of costs into fixed and variable. Variables in the short term include cash costs for the purchase of raw materials, materials, labor costs for workers, etc. Fixed costs in the short term include: labor costs for the management apparatus, rent, depreciation of fixed assets, etc.

3. In the long run, all costs act as variables, since the volumes of not only fixed, but also variable costs can change over a long-term time interval.