Total cost
Total cost (TC) is the sum of all costs incurred in producing a given level of output. It comprises Total Fixed Cost (TFC) plus Total Variable Cost (TVC). TC = TFC + TVC.
Real World
A bakery pays £2,000 monthly rent regardless of output, but its flour and energy bills rise with each extra loaf — total cost therefore climbs as production increases even though rent stays fixed.
Exam Focus
Distinguish clearly between fixed and variable components when explaining TC — marks require the TC = TFC + TVC formula.
How well did you know this?