Talk:Fixed cost

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Redirected to this article from "Indirect costs" (which means: Indirect cost = Fixed cost), I read in the article: "Indirect costs may be fixed or variable." Or this statement is wrong, or there should be no redirection. --Wissons 08:43, 17 February 2006 (UTC)[reply]

Many of the Wikipedia articles on economic costs need a lot of work. There seems to be a lot of confusion between pages that discuss indirect, fixed, and sunk costs. The sunk cost page also veers to far into psychological economics which I disagree with... but of course that's a comment for the "Sunk Cost" page. I do believe fixed cost needs its own page as it is distinct from indirect cost. Fixed cost is a specific kind of cost that can define an indirect cost.

All fixed costs become variable in costs in the long run. (This is the definition of the short run/long run.

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Tagged for cleanup per above. RJFJR 02:36, 14 September 2007 (UTC)[reply]

By definition, to say "fixed costs become variable costs" is to say "costs that are NOT dependent on volume become costs that ARE dependent on volume." If that is possible over time, then the mechanism needs explaining somewhere. I suspect it comes down to symantics - not that this is trivial. Is there a case for a new page that addresses the areas of conflict in terminology? --Trevithj (talk) 20:35, 17 September 2008 (UTC)[reply]

For example, the widget machine breaks down and needs to be replaced.--Gregalton (talk) 04:58, 18 September 2008 (UTC)[reply]

Depreciation is an interesting one. I depreciate machine X per month. It doesn't matter how many widgets it has made, it is still worth nothing at the end of n months. A fixed cost by definition. I depreciate machine Y per unit. It doesn't matter how many months this takes. By definition, a variable cost.

Both called "depreciation", both called "cost", but two different units of measure ($/month vs $/unit).--Trevithj (talk) 00:12, 19 September 2008 (UTC)[reply]

While I see your point, you have to distinguish between depreciation (the accounting concept) and depreciation (the economic concept). If the one does not coincide with the other, the relationship to fixed cost will break down.

But otherwise I agree: if the machine degrades on usage, directly related to volume, that would be a variable cost.--Gregalton (talk) 04:32, 19 September 2008 (UTC)[reply]

Hmm. Is economic depreciation measured in $? Yet another unit of measure? -- Trevithj (talk) 21:37, 21 September 2008 (UTC)[reply]

Fixed costs should not be confused with sunk costs.

In determining the optimal level of output in the short run fixed costs are treated as sunk costs - they are ignored. If a firm is maximizing profits and fixed costs double this event would have no effect on the firm’s operations (other than reducing profits). The change in fixed cost would have no effect on the firm’s MC curve. Nor would it affect the price of outputs. Therefore the firm would simply pay the increased fixed costs and otherwise continue to operate as before.Jgard5000 (talk) 17:34, 3 November 2009 (UTC)jgard5000Jgard5000 (talk) 17:34, 3 November 2009 (UTC)[reply]

Fixed cost are the cost associated with the use of fixed inputs. Fixed inputs are those inputs that do not vary with output they are not functionally related to the level of production. --Jgard5000 (talk) 21:07, 8 July 2010 (UTC)jgard5000--Jgard5000 (talk) 21:07, 8 July 2010 (UTC) In the long run there are no fixed inputs thus no fixed costs. --Jgard5000 (talk) 10:48, 3 August 2010 (UTC)jgard5000--Jgard5000 (talk) 10:48, 3 August 2010 (UTC)--Jgard5000 (talk) 10:48, 3 August 2010 (UTC) The point is that it is the input use that is fixed not necessarily the cost associated with the input.[reply]