00:01
So what's the difference between fixed cost and variable costs? the main difference is the fixed costs are going to be all of those costs that we pay once.
00:15
Where variable costs are going to be costs that we incur every time we increase the output quantity.
00:27
So the obvious bit here is that fixed costs come from fixed inputs and variable costs.
00:35
Come from variable inputs, right? for example, if we need to buy a factory, then we buy that factory that's going to be a fixed cost, right? because if we increase the output, we're not going to have to spend more money and more factories.
00:53
We just need to buy that one factory.
00:56
And you may be thinking, well, if you increase production, buy a lot, then you could potentially buy more than one factory.
01:06
But that would be a difference between long run and short run.
01:11
In this case, again, we're focusing on the short run, in which case one factory is enough.
01:17
Variable costs are going to come from variable input.
01:21
If we are buying, if we're making, for example, belts, right? we're a factory that makes belts...