Question

If total fixed cost of producing 5 units of output is Rs. 20 and total variable cost is Rs. 50, then what will be the value of Total cost of producing 5 units of output? ​

Answer 1

Answer:

While the answer is simple, discussing variable costs in Economics is generally to study non-competitive high fixed cost industries, which is 4xx/5xx level work. If you’re really studying Industrial Organization and need help with this, please go talk to your advisor.

For those curious, Total cost (TC) is the fixed costs (FC) plus the variable costs (VC):

TC=FC+VC

Average Variable Costs (VC-bar) is the total variable cost divided by the quantity produced:

VC¯¯¯¯¯¯¯¯=VCQ

VC=VC¯¯¯¯¯¯¯¯∗Q

So to answer your question:

∴TC=FC+VC¯¯¯¯¯¯¯¯∗Q

Answer 2

Answer:

TFC + TVC = TC

20 + 50 = 70 ₹

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