Q13 of 20 Page 3

What is the total fixed cost, total variable cost and total cost of a firm? How are they related?

Total fixed costs refer to the costs incurred by the firm for employing fixed factors of production to produce output. It always remains constant and hence is represented by a straight line in the graph below. For example, machinery.


Total Variable costs refer to the costs incurred by the firm for employing variable factors of production to produce an output. It is represented as an increasing curve. For example, labour.


The total costs of the firm hence refer to the sum of the total fixed cost and the total variable cost. This curve is higher than both of them as it is the sum of both the costs incurred.


Source: NCERT


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