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1 The term for the type of costs that changes as production level changes is variable costs.

Economics

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4 parts
3.4

R4100\text{R}4100

3.5

R2300\text{R}2300

3.6

R6400\text{R}6400

3.7

R23\text{R}23

Step-by-step solution

8 steps

Here are the solutions to your questions on short-run costs:

Part 3.1

The term for the type of costs that changes as production level changes is *variable costs

Part 3.2

Another term for inputs is *factors of production

Part 3.3

The short run is an economic period during which at least one factor of production is fixed, while others are variable. This means a business cannot change all its inputs in the short run.

Part 3.4

R4100\text{R}4100

  1. Identify the variable costs from the table.

    Variable costs include raw material, water, and electricity.

  2. Calculate the total variable costs (TVC).

    TVC=Raw material+Water+Electricity\text{TVC} = \text{Raw material} + \text{Water} + \text{Electricity} TVC=R3000+R500+R600\text{TVC} = \text{R}3000 + \text{R}500 + \text{R}600 TVC=R4100\text{TVC} = \text{R}4100

    The total variable costs for Ms Sihle's business are R4100\boxed{\text{R}4100}.

Part 3.5

R2300\text{R}2300

  1. Identify the fixed costs from the table.

    Fixed costs include rent and salaries.

  2. Calculate the total fixed costs (TFC).

    TFC=Rent+Salaries\text{TFC} = \text{Rent} + \text{Salaries} TFC=R300+R2000\text{TFC} = \text{R}300 + \text{R}2000 TFC=R2300\text{TFC} = \text{R}2300

    The total fixed costs for Ms Sihle's business are R2300\boxed{\text{R}2300}.

Part 3.6

R6400\text{R}6400

  1. State the formula for total costs (TC).

    TC=TFC+TVC\text{TC} = \text{TFC} + \text{TVC}

  2. Substitute the calculated TFC and TVC values.

    TC=R2300+R4100\text{TC} = \text{R}2300 + \text{R}4100 TC=R6400\text{TC} = \text{R}6400

    The total costs for Ms Sihle's business are R6400\boxed{\text{R}6400}.

Part 3.7

R23\text{R}23

  1. State the formula for Average Fixed Cost (AFC).

    AFC=TFCQuantity (Q)\text{AFC} = \frac{\text{TFC}}{\text{Quantity (Q)}}

  2. Substitute the TFC from 3.5 and the given quantity (100 units).

    AFC=R2300100 units\text{AFC} = \frac{\text{R}2300}{100 \text{ units}} AFC=R23 per unit\text{AFC} = \text{R}23 \text{ per unit}

    The Average Fixed Cost for this business when producing 100 units is R23\boxed{\text{R}23}.

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