* Division of total cost between fixed and variable costs depends on time horizon * In a few months, GM cannot adjust number/size of factories, only workers * Cost of factories, is therefore, fixed cost in short run * Over several years, however, GM can expand size and number of factories * Cost of factories, is therefore, variable cost in long run * Because fixed costs become variable in the long run, the ATC curve in short run differs from the ATC curve in the long-run * Long-run ATC is much flatter than short-run ATC