Type of costs

Total fixed cost (Sunk cost) (TFC)

• Already incurred due to past decisions
• Cannot be changed in short run.
• Related to passage of time but not level of production
  

Total variable cost (TVC)

• Incurred in producing goods eg labour and raw materials
• Can change in short run
• Related to level of production but not passage of time
  

Average fixed cost (AFC)

• Averaged fixed cost decreases as output increase
  AFC = ATC / total output
  

Average variable cost (AVC)
AVC= TVC / Total output

Average total cost (ATC)

• Total cost per unit of output
  ATC= (TFC + TFC) / Total output
  

Marginal cost

• Additional costs of producing one more unit
  MC = DTC/Dq
  TC = TFC + TVC

Opportunity costs

• The return available from alternative investments