In production, total cost comprises of

Step 1: Analyze the question The question asks what the two components of total cost (TC) are in production.

Step 2: Explain the concept Costs of production are divided into two broad groups:

• Fixed cost (FC): costs that do not change with the level of output in the short run, such as rent, insurance, and salaries of permanent staff. They must be paid even if output is zero.
• Variable cost (VC): costs that change as output changes, such as raw materials, wages of casual workers, and fuel.

Step 3: Show the solution

Total cost = Fixed cost + Variable cost TC = FC + VC

Now check the options:

• A. Average cost and marginal cost: these are derived measures (AC = TC ÷ Q, MC = change in TC ÷ change in Q). They are not components of total cost.
• B. Variable cost and average cost: average cost is derived from total cost, so it is not a component.
• C. Variable cost and fixed cost: these are the two parts that add up to total cost. ✔
• D. Marginal cost and variable cost: marginal cost is the extra cost of one more unit, not a component.
• E. Fixed cost and average cost: average cost is not a component.

Step 4: Answer The correct option is C. variable cost and fixed cost.

Tip: Remember "TC = FC + VC". Average and marginal costs are per-unit ideas calculated from total cost, so they never make up total cost. If you see them in an option about what total cost "comprises," you can eliminate it right away.