Quasi-Fixed Costs and Their Impact

In analyzing the behavior of firms, economists have long distinguished between the in,f1nence of fixed and variable costs. There have gradually appeared in the budgets of many companies certain cost items like promotion and advertising which are allocated for a given period, but which are essentially independent of actual production for the same period in the manner of fixed costs. In this article, the growth in the importance of such budgeted items is outlined and their meaning analyzed in terms of pricing under monopolistic competition.