Firms’ Costs, Revenue & Objectives - 22

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22 - IGCSE Economics

4 Terms

1
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Define fixed costs (FC) [2]

  • Costs that don’t change as output changes

  • Paid even when output is zero


<ul><li><p><span style="background-color: transparent; font-family: &quot;Didact Gothic&quot;, sans-serif;">Costs that </span><span style="font-family: &quot;Didact Gothic&quot;, sans-serif;">don’t change</span><span style="background-color: transparent; font-family: &quot;Didact Gothic&quot;, sans-serif;"> as output changes</span></p></li><li><p><span style="font-family: &quot;Didact Gothic&quot;, sans-serif;">Paid </span><span style="background-color: transparent; font-family: &quot;Didact Gothic&quot;, sans-serif;">even when output is zero</span></p></li></ul><p></p>
2
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Define variable costs (VC) [2]

  • Costs that change directly with output 

  • Zero costs when output is zero


<ul><li><p><span style="background-color: transparent; font-family: &quot;Didact Gothic&quot;, sans-serif;">Costs that </span><span style="font-family: &quot;Didact Gothic&quot;, sans-serif;">change directly</span><span style="background-color: transparent; font-family: &quot;Didact Gothic&quot;, sans-serif;"> with output&nbsp;</span></p></li><li><p><span style="background-color: transparent; font-family: &quot;Didact Gothic&quot;, sans-serif;">Zero costs when output is zero</span></p></li></ul><p></p>
3
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How are total costs calculated?

TC + VC = TC

<p><span style="background-color: transparent; font-family: &quot;Didact Gothic&quot;, sans-serif;">TC + VC = TC</span></p>
4
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