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

Question

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