- In the production of goods, or provision of services, there are costs
- Costs may be fixed or variable.
Total Costs = Fixed Costs + Variable Costs
- Fixed costs do not vary with output, eg. rent. Thye are paid whether or not a business is producing goods, and regardless of how much a business is producing.
- Variable costs do change with output, eg. raw materials. The more you make the higher the variable costs.
- Semi-variable costs vary with output, but not directly. Eg. a business may need…
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