Total cost is broken down into two components:

Question

Quizplus · Accepted Answer

Total cost is the sum of fixed cost and variable cost. Fixed costs are those which do not change with the level of output, such as rent or salaries, while variable costs change with the level of output, such as raw materials or labor costs. Marginal cost, on the other hand, is the cost of producing one additional unit of output. Therefore, the two components of total cost are variable cost and fixed cost.

Total Cost Is Broken Down into Two Components