Question

Define cost. Discuss the difference between fixed cost and variable cost.

Answer 1

Answer:

Cost means the monetary value of the factor of production.Ex.  Cost of land is rent, cost of labor is wage.

Fixed cost means the cost which remai fixed fixed in the short run and we do not need to calculate these costs more than one time in a short run business. Ex. Land cost, building cost.

Variable Costs means the cost which we have to calculate every year because is changes every year. Ex. Electricity cost, fuel cost.