Question

Give an example of how we use the costs of production in today's world? Explain

Answer 1

Total cost encompasses both variable and fixed costs. It takes into account all the costs incurred in the production process or when offering a service. For example, assume that a textile company incurs a production cost of $9 per shirt, and it produced 1,000 units during the last month. So, the variable cost will be
1,000*$9 = $9000

The fixed cost is the rent, say $5000, labor cost, say $10,000.

So, the total cost of production will be:

$9000 + $5000 + $ 10000
= $24,000