Maharashtra BoardEnglish MediumSTD 12 Commerce / ArtsEconomicsSupply Analysis4 Marks
Question
Total cost includes Total Fixed Cost and Total Variable Cost.
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Answer
Yes, I agree with this statement.
Total cost is the total cost incurred by a firm on the factors of production required for production of goods and services. Total cost is the sum total of fixed cost and variable cost.
Total fixed cost includes cost incurred on fixed factors like factory building, plant size, machinery etc. Fixed cost remains fixed in the short run but changes in the long period. Total variable cost includes cost on variable factors like raw materials, fuel, labour etc., which changes according to the output in the short period also. So while calculating Total Cost we include Total Fixed Cost (TFC) and Total Variable Cost (TVC). So, TC = TFC + TVC. Thus, the above statement is true.
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