Define and Describe the Three Conditions Under Which Decisions Are

question 227

Essay

Define and describe the three conditions under which decisions are made.

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Definitions:

Implicit Cost

The opportunity costs that are not directly paid or seen but represent real costs to a business, such as the value of time or resources.

Short Run

A period during which at least one of a firm's inputs is fixed, limiting the firm's capacity to adjust to market changes.

Long Run

A period in economics where all factors of production and costs are variable, allowing for full adjustment to changes in market conditions.

Lowest Price

The minimum price at which a product or service is available in the market.