ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Total costs are composed of both total fixed costs and total variable costs. Total fixed costs are the sum of all consistent, non-variable expenses a company must pay. For example, suppose a company leases office space for $10, 000 per month, rents machinery for $5, 000 per month, and has a $1, 000 monthly utility bill.

Detailed explanation-2: -Consequently, total cost is fixed cost (FC) plus variable cost (VC), or TC = FC + VC = Kr+Lw.

Detailed explanation-3: -Take your total cost of production and subtract your variable costs multiplied by the number of units you produced. This will give you your total fixed cost.

Detailed explanation-4: -Total cost – The sum of fixed cost and variable cost. Marginal costs – The extra (additional) cost of producing one more unit of output; equal to the change in total cost divided by the change in output (and, in the short run, to the change in total variable cost divided by the change in output).

Detailed explanation-5: -What is total variable cost? A company’s total variable cost is the expenses that change in relation to the total production during a given time period. These costs are directly connected to a business’ volume of production and may increase or decrease depending on how much a company produces.