Answer to Question #231901 in Microeconomics for RomanReignRotich

Question

Costs of production
i. What is the cost of any input? (5 marks)
ii. With the aid of a clearly labeled diagrams, illustrate the
relationship between the following cost functions; Total Cost
(TC), Total variable Cost (TVC), Total Fixed costs (TFC),
Average Total cost (ATC), Average Variable Cost (AVC),
Average Fixed Costs (AFC) and Marginal Cost (MC). (15 marks)
iii. What is the main difference between fixed and variable costs? (5
marks)

Answer 1

I) This is a set of costs that has been incured when producing a certain product.

Ii)

III) Variable costs tend to vary considering the output that has been produced. However, fixed costs maintain the original amount despite the production output.