Question

Labour is a variable input into the production process. In this sense, a change ir the amount of labour used in production (the number of employee hours) lead to proportionate change in labour costs. However, some other labour-related costs may alsc occur. a) Define "quasi-fixed costs" and give three examples of them.

Answer 1

Quasi-fixed costs are costs that do not change in the short run, but can vary over the long run. Examples include depreciation on machinery and equipment, training and development costs, and administrative and managerial costs.

Step-by-step explanation:

Quasi-fixed costs are costs that do not change in the short run, but can vary over the long run. They are costs that are indirectly related to the amount of labor used in production. Examples of quasi-fixed costs include:

1. Depreciation on machinery and equipment: As more employee hours are used in production, machinery and equipment may experience more wear and tear, which can increase the depreciation costs.
2. Training and development: If the number of employee hours increases, there may be a need for additional training and development programs to ensure the productivity and effectiveness of the employees.
3. Administrative and managerial costs: As the number of employee hours increases, there may be a need for more administrative and managerial staff to handle the additional workload and responsibilities.