Briefly Describe the Difference Between Fixed, Variable, and Mixed Costs

question 24

Essay

Briefly describe the difference between fixed, variable, and mixed costs. Give one example of each.

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Definitions:

Marginal Cost

The cost of producing one additional unit of a product or service, used in economics to determine the optimum production level.

Output

The quantity of goods or services produced by a firm, sector, or economy.

Total Variable Costs (TVC)

TVC refer to the costs that vary directly with the level of output produced, including expenses such as materials and labor.

Marginal Cost

The cost of producing one additional unit of a product.