What is Total Cost?

Total cost includes {Total Cost = total fixed cost + Total Variable cost }

In economics, total cost means total cost of production that includes total fixed cost and total variable cost of production.

Total fixed cost includes salaries of employees, wages, rent of buildings or equipment, interest on capital, and interest on loan et cetera. Total variable cost are raw material, electricity, daily labour, and stationary or office expenditure.

If you observe the below cost schedule table, one can easily understand concept of total cost and what is total cost in the economics. When there are zero units produced, there is fixed cost as 1000, as fixed cost is constant and fixed cost don't change according to the output or production. Therefore here the total cost is 1000 as there is no variable cost which would be incurred if output is brought out. When the production is started with 1000 units, fixed cost remains same as 1000/- and variable costs per unit is 1.00/- . Therefore the total fixed cost incurred at this point is 2000/-.

Total Cost Schedule Table

Total Cost Schedule Graph