Costs are an essential aspect of any business, and understanding the different types of costs is crucial for making informed decisions. Total cost is the sum of all costs incurred by a business, including fixed and variable costs. Fixed costs are expenses that do not change with the level of production, such as rent or salaries. Variable costs, on the other hand, are expenses that vary with the level of production, such as raw materials or labor.

Average total cost is the total cost per unit of output, while average fixed cost is the fixed cost per unit of output, and average variable cost is the variable cost per unit of output. Marginal cost is the additional cost incurred by producing one more unit of output.

Understanding these different types of costs and their relationships can help businesses make informed decisions about pricing, production levels, and profitability.