Total Cost

Definition

Total cost refers to all expenses incurred in producing a certain quantity of goods or services, including both explicit costs (such as wages and materials) and implicit costs (such as opportunity costs).

Related terms

Marginal Cost: Marginal cost is the additional cost incurred from producing one more unit of a good or service.

Production Function: A production function shows how inputs (such as labor and capital) are transformed into outputs (goods or services).

Average Variable Cost: Average variable cost is calculated by dividing total variable cost by the quantity produced, representing the average cost per unit that varies with output.