Fixed and variable costs

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4 Terms

1
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Fixed costs

Fixed costs do not change when the business changes its level of output e.g. rent, rates and salaries.

2
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Variable costs

Variable costs change with the business's level of output e.g. fuel costs, wages, raw materials and components.

3
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Total costs

are fixed and variable costs added together

4
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Average costs

are total costs of production divided by the level of production or output to give the cost to give the cost of producing a single unit of output