In economics, total costs are the sum of fixed costs and variable costs.

fixed costs + variable costs = total costs

Costs are the returns to the four factors of production: land, labour, capital, and enterprise; which the firm must pay to keep these factors employed. These returns are referred to as rent, wages, interest, and profit respectively.

Fixed costs are costs which remain fixed as output varies e.g. salary of senior administrative staff. When a firm increases its output, fixed costs remain unchanged over a wide range of output.
Variable costs are costs which vary as output rises e.g. wages paid for labour. When a firm increases its output, the variable costs increase.

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