Final answer:
A firm's cost structure consists of fixed costs and variable costs. Total cost is the sum of fixed costs and variable costs. Average variable cost, average total cost, and marginal cost are important calculations in determining a firm's cost structure.
Step-by-step explanation:
A firm's cost structure consists of fixed costs and variable costs. Fixed costs are expenses that remain the same regardless of the quantity of goods or services produced, such as rent or insurance. Variable costs, on the other hand, are expenses that vary with the quantity of goods or services produced, such as raw materials or labor.
The total cost is the sum of fixed costs and variable costs. Average variable cost is calculated by dividing the total variable cost by the quantity produced. Average total cost is calculated by dividing the total cost by the quantity produced. Marginal cost is the additional cost incurred when producing one additional unit of output.