mvOW6.11208$[EMAIL PROTECTED]">So you mean I just sit down
and type:
Ok computer, I want a W3C complient web browser, and all the source for
it, hit enter and then suddenly a couple hundred million lines of code
pop up and I get a web browser? No, not quite. It takes a very, very
long time to write a web browser.You said it requires no labor.
I said nothing of the sort. I said software has no variable cost. I also said
you're way out of your league here, and need to take an economics class in order
to look like less of a fool in this discussion.
God, why do I bother.It does
require labor.
The concept of variable and fixed cost must be defined in terms of periods of time (short run or long run) you are considering. Software is an abstraction for a product and as such can be considered intangible. But in order to deliver a product tangible (raw materials, equipment, supplies), intangibles must be taken into account (labor, energy costs, rent, etc). If you consider software as the final product only, then you might be right. Once you produce it, what is left to do? For a software producing company, the definition then must be expanded to include the cost of marketing, packaging and delivering the product since for software companies producing the software is not an altruistic event by itself, but it has the purpose of selling and or distributing it later. what happens if the product doesn't sell as well as expected?, They will produce less to adjusts the inventory for a while and the cost becomes variable. Of course if the employees kept their salary intact and the company keep paying insurance and electricity and equipment maintenance, those cost of producing the software remained fixed. But the fact is that there are indeed variable costs in producing software (the abstraction). I believe you are using either an old textbook or one that is based on conservative (strict definition) information to determine what is fixed and what is variable cost without considering how broad is the period of time (short run or long run) you are including in your definition.
The following address includes some information that might help clarify the concept.
http://hadm.sph.sc.edu/Courses/Econ/Cost/Cost.html
