The _____ is fixed costs plus the sum of the variable costs.

The _____ is fixed costs plus the sum of the variable costs.

• A. Total revenue
• B. Total cost
• C. Average cost
• D. Marginal cost

Answer: (B)

Total cost is the amount a business spends to produce a given level of output, built from fixed costs that don’t change with output and variable costs that do. Since TC = FC + VC, adding the fixed costs to the variable costs at a given level of production gives the total cost. For example, if fixed costs are 100 and the variable costs at 10 units are 50, the total cost is 150. This concept contrasts with total revenue (price times quantity), average cost (total cost divided by quantity), and marginal cost (the change in total cost from producing one more unit).

Total cost is the amount a business spends to produce a given level of output, built from fixed costs that don’t change with output and variable costs that do. Since TC = FC + VC, adding the fixed costs to the variable costs at a given level of production gives the total cost. For example, if fixed costs are 100 and the variable costs at 10 units are 50, the total cost is 150. This concept contrasts with total revenue (price times quantity), average cost (total cost divided by quantity), and marginal cost (the change in total cost from producing one more unit).