Total cost
Also called: TC · Topic: Production Function, Returns and Costs · NCERT: Class 12, Ch 3 "Production and Costs"
Meaning
Total cost (TC) is the full cost of producing a given output. TC = TVC + TFC TVC (total variable cost) is the cost of inputs like raw materials and casual labour, and it rises with output. TFC (total fixed cost) is constant. The TC curve is the TVC curve shifted up by TFC. Both have an inverse-S shape: they rise at a falling rate, then at a rising rate, because of the law of variable proportions. In the long run there is no fixed cost, so TC = TVC.
Example
In NCERT's Table 3.3, TFC is ₹20. At 1 unit, TVC is ₹10, so TC = ₹30. At 3 units, TVC is ₹24, so TC = ₹44. At zero output, TC is still ₹20.
Don't confuse with
- Total variable cost: it is zero at zero output. Total cost is never below TFC in the short run.