Average costs, variable costs, fixed costs, total costs

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  • Created by: Jade
  • Created on: 17-11-12 14:20

1. What are fixed costs?

  • The total cost of production or provision of a service
  • Costs that are independent of output produced e.g. rent, interest paid on loans
  • Costs that vary directly with output produced e.g. labour, fuel, raw material costs
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2. Where aircraft are owned by the airline, this is the cost of what?

  • Any debt
  • Any loaned finance and also depreciation
  • Any loaned finance

3. What is average cost and the equation?

  • Average cost is the unit cost of production. Average cost = Total cost x quantity
  • Average cost is the unit cost of production. Average cost = Total cost/quantity
  • Average cost is the change in total cost that occurs when output is changed by one unit. Average cost = Quantity/total cost

4. Nature of costs in most types of transport is that _____ costs are a relatively high proportion of total costs. Particularly true of air and rail transport.

  • Capital
  • Fixed
  • Variable

5. What are variable costs?

  • Costs that vary directly with output produced e.g. labour, fuel, raw material costs
  • Costs that are independent of output produced e.g rent, interest paid on loans
  • The total cost of production or provision of a service

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davidsalter

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10 questions on costs that can provide a break from more intensive studying.

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