What are the overall costs incurred by a firm known as?

The overall costs incurred by a firm are known as total costs. This encompasses all expenses related to production, which means it includes both fixed costs and variable costs. Fixed costs are those expenses that do not change with the level of output, such as rent or salaries, while variable costs fluctuate with production levels, such as raw materials and labor needed on a per-unit basis.

Total costs reflect the sum of both types of costs, providing a comprehensive overview of what it costs a firm to operate within a certain period. This is crucial for businesses when analyzing profitability and pricing strategies. Understanding total costs is essential for making informed decisions about scaling production, entering new markets, or adjusting pricing to cover all operational expenses effectively.