If total cost is ₹10980 and production is zero. find total variable cost and total cost
Answers
The Total Cost of production(TC) is Rs. 10980 and the production level is 0.Hence,the Total Fixed Cost(TFC) is Rs.10980 and the Total Variable Cost(TVC) is Rs.0.
Explanation:
In Microeconomics or Production Economics,TC=TFC+TVC which implies that total cost of production is the aggregation or summation of the total fixed and total variable cost.Now,if there is no production or production is zero,the firm or the company will still have to pay the TFC or fixed cost of production such as land rent,utility bills,electricity expenses,building rent and so forth.However,the firm will not incur any variable cost of production such as labor cost,capital expenses,expenses on raw materials or physical inputs etc. which are only applicable once the production begins or the firm starts producing any positive output.Since the production is zero in this case,the total cost would be Rs.10980,total fixed cost is also Rs.10980 and the total variable cost is 0 or TC=Rs.0+Rs.10980