Question:
Define different types of costs. Explain Fixed and Variable costs with the help of examples.
Types of cost in short run
Fixed Costs (FC)
It is the cost of fixed factors.The costs which don’t change with changing output.
Variable Costs (VC)
It is the cost of variable factors. It changes directly with output.
Total cost (TC)
It is the sum of fixed and variable cost.
Average cost (AC)
It is total cost per unit of output .
Marginal Costs (MC)
Marginal cost is the cost of producing an extra unit.
Average variable cost ( AVC)
It is variable cost per unit of output.
Average fixed cost ( AFC )
It is fixed cost per unit of output .
Opportunity Cost
It is the cost of next best alternative forgone.
Economic Cost
It is sum total of explicit and implicit cost.
Accounting Costs
This is the cost which includes actual monetary outlay.
Step by step
Solved in 3 steps
