Question

How is the total cost of a factory or other production site determined?


fixed cost plus variable cost


marginal cost plus variable cost


marginal cost plus output cost


fixed cost plus marginal cost

Answer 1

The total cost of a factory or other production site is typically determined by the sum of fixed costs and variable costs.

- **Fixed Costs** are the costs that do not change with the level of production, such as rent, salaries, and equipment depreciation.
- **Variable Costs** are costs that vary directly with the level of production, such as raw materials and direct labor.

So the correct answer is:

**fixed cost plus variable cost**