ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Variable cost plus fixed cost equals total cost. The marginal cost is the change in total cost from producing an additional output, so if the total cost of producing nothing is $10 and the total cost of producing one unit is $20, the additional cost of that first unit must be $10.

Detailed explanation-2: -Total fixed cost (TFC) is that cost which does not change with a change in the level of output. Total variable cost (TVC) is that cost which changes as the level of output changes. Total cost (TC) is the sum of total fixed cost and total variable fixed cost.

Detailed explanation-3: -Production costs can include a variety of expenses, such as labor, raw materials, consumable manufacturing supplies, and general overhead. Total product costs can be determined by adding together the total direct materials and labor costs as well as the total manufacturing overhead costs.

Detailed explanation-4: -Variable costs change based on the amount of output produced. Variable costs may include labor, commissions, and raw materials. Fixed costs remain the same regardless of production output. Fixed costs may include lease and rental payments, insurance, and interest payments.