Identify three fixed costs and three variable costs that a h

Identify three fixed costs and three variable costs that a household incurs in the short-run. Explain how adjusting one or more of the fixed inputs in the long run can reduce the costs of household production

Solution

Fixed cost:

1. Cost of Microwave oven

2. Cost of Refrigerator

3. Cost of Cooking utensils in the house

Variable Cost:

1. Cost of Vegetables on the daily basis

2. Cost of Cleaning Maid on the monthly basis

3. Cost of the Gas cylinder for cooking the food

Now, here is an example.

Suppose there is an increase in the no. of microwave ovens. So earlier if we were using gas again and again for heating something up we can shift that cost to microwave oven and thus overall variable costs are reduced and in total the total cost of production also goes down.