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3 cards from this section. Quick, good the night before a test.
Define total fixed cost.
Think about expenses that don't change.
What is the relationship between total variable cost and output?
Variable costs change with production.
What is the formula for total cost?
Think about how we assess all expenses.
True or False: Total Fixed Cost changes with the level of production.
Consider costs that are unaffected by production levels.
A firm pays Rs 100 for rent (TFC) and Rs 60 in materials (TVC) when producing 10 units. Determine TC, AVC, and AFC.
Start by calculating total cost first, then break it down into averages.
A company's SMC is Rs 14, and its AVC is Rs 12. What can you infer about the AVC if production increases?
Refer back to the relationship between SMC and AVC.
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