Question

What is fixed cost, Total Cost, margin cost?

a) Fixed cost: Total expenses that do not change with production quantity. Total cost: The overall expense. Margin cost: Cost associated with producing one additional unit.
b) Fixed cost: Variable expenses that change with production. Total cost: Expenses incurred in the short term. Margin cost: The cost of raw materials.
c) Fixed cost: Variable expenses that remain constant. Total cost: Total fixed and variable expenses. Margin cost: The profit percentage.
d) Fixed cost: The cost of machinery. Total cost: Overall expenses including fixed and variable. Margin cost: Cost of marketing.

Answer 1

Fixed cost is the constant expenses regardless of production output; total cost is the sum of fixed and variable costs; marginal cost is the additional cost of producing one more unit.

Step-by-step explanation:

In business economics, fixed cost refers to expenses that remain constant regardless of the level of production within a certain capacity. Common examples of fixed costs include rent for factory space and salaries for permanent staff. These costs are not affected by the quantity of goods produced in the short run. As for total cost, it is the sum of all costs a company incurs for production, which includes fixed costs plus variable costs (costs that change with the level of output). Lastly, marginal cost represents the additional cost of producing one more unit of a good or service, which is calculated by observing the change in total cost when the production quantity is increased by one unit.