Give an example which states the meaning of cost in economics
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Total cost (TC) in the simplest terms is all the costs incurred in producing something or engaging in an activity. In economics, total cost is made up of variable costs + fixed costs.
Variable costs (VC) are costs that change based on how many goods you buy or how much of a service you use. A simple way to think about variable costs is to look at your utility bill in your home. As you use more gas or electricity during the colder months, your heating bill is usually higher. When the weather is nicer, your bill typically goes down. When it is extremely hot outside, though, the bill can start to go back up as you need air conditioning. The cost therefore varies as your usage varies.
Fixed costs (FC) are costs that don't change from month to month and don't vary based on activities or number of goods produced. They stay exactly the same. These are easy to calculate and could be things like the set amount of rent you pay every month for your apartment or your $200 car payment. Regardless of whether you stay at your apartment 30 days during the month or 10 days during the month, the rent costs the same amount.
Variable costs (VC) are costs that change based on how many goods you buy or how much of a service you use. A simple way to think about variable costs is to look at your utility bill in your home. As you use more gas or electricity during the colder months, your heating bill is usually higher. When the weather is nicer, your bill typically goes down. When it is extremely hot outside, though, the bill can start to go back up as you need air conditioning. The cost therefore varies as your usage varies.
Fixed costs (FC) are costs that don't change from month to month and don't vary based on activities or number of goods produced. They stay exactly the same. These are easy to calculate and could be things like the set amount of rent you pay every month for your apartment or your $200 car payment. Regardless of whether you stay at your apartment 30 days during the month or 10 days during the month, the rent costs the same amount.
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