ECONOMICS
SUPPLY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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fixed costs and marginal costs
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fixed costs and variable costs
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marginal costs and variable costs
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fixed, marginal, and variable costs
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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: -The correct answer is Total costs. Total cost (TC) describes the total economic cost of production and is made up of variable costs, which vary according to the quantity of a good produced and include inputs such as labor and raw materials, plus fixed costs, which are independent of the quantity of a good produced.
Detailed explanation-3: -The total cost is the sum of fixed costs and variable costs. For example, if a firm has a fixed cost of $30 per unit and a variable cost of $5 per unit as they increase their output, the total cost will be $35.
Detailed explanation-4: -Total Cost = Total Fixed Cost + Total Variable Cost. It can also be represented in a more advanced way as, Total Cost = (Average fixed cost + Average variable cost) x Number of units.
Detailed explanation-5: -Consequently, total cost is fixed cost (FC) plus variable cost (VC), or TC = FC + VC = Kr+Lw. In the long run, however, both capital usage and labor usage are variable.