Costs

• Economic costs of production for a firm is the opportunity cost of production of goods
• Fixed costs are costs that don't vary directly with output
• Fixed costs are also called overhead and indirect cs costs
• Variable costs are costs that vary directly with output
• Variable costs are also called direct or prime costs
• Total costs are the costs of producing at a given level
• Total Costs is the sum of total variable costs and total fixed costs
• $Total cost/ Quantity$ Calculation for average cost
• Marginal cost is the cost of producing an extra unit of output
• Marginal cost is calculated through the change in total cost divided by the change in quantity
• Economies of scale occur when increasing the size of a firm leads to lower average costs due to increased efficiency from specialisation and economies of scope