Final answer:
The formula required for expressing the total cost is total costs equal fixed costs plus variable costs. An example is given using a barber shop where fixed costs are constant and variable costs depend on the number of barbers hired.
Step-by-step explanation:
The formula for expressing the total of a fixed, variable, or mixed cost at any level of activity is total costs = fixed costs + variable costs. For example, in a barber shop scenario, if the fixed costs for space and equipment are $160 per day and the variable costs are $80 per barber hired, with two barbers the total cost can be calculated as follows:
- Fixed costs: $160 (this remains constant regardless of activity)
- Variable costs: 2 barbers × $80 per barber = $160
- Total costs: $160 (fixed) + $160 (variable) = $320
This straightforward addition of fixed and variable costs to calculate total costs applies to any business or economic model where costs are clearly divided into these categories. The Production, Costs, and Industry Structure chapter provides additional formulas for calculating average and marginal costs, which are also critical in understanding a firm's cost structure.