Define or explain the following concepts: i. Total Cost

Define or explain the following concepts:

i. Total Cost

Answer:
i. Total cost refers to the sum of all the costs incurred in the production process by a firm, to carry out the production of goods and services. It is the aggregate of expenditure incurred on fixed factors as well as variable factors. Therefore, the total cost can be segmented into the following two parts namely - TFC (Total Fixed Cost) and TVC (Total variable Cost). That is,

TC = TFC + TVC

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