Costs are necessary expenses for a business and are categorized as either variable or fixed. Variable costs change directly with production levels, increasing as production increases and decreasing as production decreases. Fixed costs remain the same regardless of the production level and include expenses like rent and loan interest. The total costs of a business are the sum of total variable costs and total fixed costs.

2. Costs and profits are
very important concepts
in microeconomic
analysis.
Costs are necessary expense in an enterprise
must and maybe categorized as variable or
fixed costs. When added together, these
costs form the total costs of an enterprise.

3. Variable costs (VC) are expenses
incurred productions that tend to
change directly as production
changes. VC behaves in such a way
that if production is increased, cost
also increase. If production decreased
then it is expected that the total
variable cost also decrease.

5.  Fixed Cost (FC) – are expenses that do
not change or vary with production.
Regardless of the production level, this
cost remains the same.
 Example: Rents for utilities and city
services interest payments on loans

6.  Adding all fixed costs of the enterprise gives
us the TFC
 TFC = TVC + TFC