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It has been said that, "In the long run, all costs are variable." If this is the case, how can production be studied by dividing costs into fixed and variable components?

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The distinction between long term and short term is denoted.

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It has been said that, "In the long run, all costs are variable." If this is the case, how can production be studied by dividing costs into fixed and variable components?

The fixed costs are the costs, which are to be incurred irrespective of the volume of the production. Even if the production is at zero unit level these costs are incurred and cannot be avoided. The variable costs are the costs, which vary with the volume of the production. So the firm can reduce or increase ...

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