Question
Fixed Cost + Variable Cost
a) total cost.
b) average cost.
c) marginal cost.
d) unit cost.
a) total cost.
b) average cost.
c) marginal cost.
d) unit cost.
Ask by Curry Bradley. in the United States
Mar 24,2025
Upstudy AI Solution
Tutor-Verified Answer
Answer
Total cost is the sum of fixed and variable costs.
Solution
The equation “Fixed Cost + Variable Cost” represents the total cost incurred in production.
Let’s analyze the options:
a) Total Cost: This is the correct answer, as total cost is defined as the sum of fixed costs and variable costs.
b) Average Cost: This is calculated by dividing the total cost by the number of units produced, not simply the sum of fixed and variable costs.
c) Marginal Cost: This refers to the additional cost incurred by producing one more unit of a good or service, which is not represented by the sum of fixed and variable costs.
d) Unit Cost: This is the cost per unit of output, which is also not simply the sum of fixed and variable costs.
Thus, the correct answer is:
a) total cost.
a) total cost.
Answered by UpStudy AI and reviewed by a Professional Tutor
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Simplify this solution Extra Insights
Total cost is the sum of fixed costs, which remain constant regardless of production volume, and variable costs, which fluctuate with the level of output. Understanding this relationship is crucial for businesses as it helps set prices and gauge profitability based on different production levels.
When evaluating production decisions, it’s essential to examine not just total cost but also how these costs behave as output changes. The distinction between fixed and variable costs aids in making strategic choices, allowing companies to adjust operations efficiently during fluctuations in demand.
