Economic cost is the combination of losses of any goods that have a value attached to them by any one individual. (Some sources refer to accounting cost as explicit cost and opportunity cost as implicit cost.
- Total variable cost (TVC) is the same as variable costs.
- Total fixed cost (TFC)
- Average cost (AC) are total costs divided by output. AC = TFC/q + TVC/q
- Average fixed cost (AFC) is equal to total fixed cost divided by output i.e. AFC = TFC/q. The average fixed cost function continuously declines as production increases.
- Average variable cost (A.V.C) = variable costs divided by output. AVC =TVC/q. The average variable cost curve is typically U-shaped. It lies below the average cost curve and generally has the same shape - the vertical distance between the average cost curve and average variable cost curve equals average fixed costs. The curve normally starts to the right of the y axis because with zero production