Write the differences between total fixed cost and total variable cost.
1 Answer
Short run is the time period in production when some factors are constant and others are variable so that producer has to change the size of variable inputs to change output size where labour is taken as variable input not others.
The sum of all costs aroused during production of certain unit of a goods is total cost (TC) which can be divided into total cost of fixed input (TFC) and total cost of variable input (TVC) which have following differences.
| S.N. | Total fixed cost | Total variable cost |
| 1. | TFC is created due to fixed inputs in short fun. | TVC is created due to variable inputs in short run. |
| 2. | TFC covers depreciation, security expenses, management cost etc. | TVC covers wage of workers, price of raw materials and fuel etc. |
| 3. | TFC is constant from zero to any size of output. | TVC is zero at zero output and increases at different rates along rise in output. |
| 4. | As TFC is constant at each output it is not possible to predict output size on the basis of TFC. | Since TVC rises at various rate, we can predict the stage of output on the basis of TVC. |
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