(i) Fixed Cost: It does not change with the change in the quantity of output. In other words, expenses on fixed factors remain unchanged irrespective of the level of output, whether the output is increased or decreased or even it becomes zero. For example, rent of the factory, watchman's wages, worker's salary. It is also called as 'Supplementary Cost' or 'Overhead Cost'.
(ii) Variable cost: These costs vary with the level of output. Examples of variable costs are: wages of temporary workers, cost of raw materials, fuel cost, etc., Variable cost is also called as Prime Cost, Special Cost, or Direct Cost.
(iii) Money cost: Production cost expressed in money terms is called as money cost. In other words, it is the total money expenses incurred by a firm in producing a commodity. Money cost includes the expenditures such as cost of raw materials, payment of wages and salaries, payment of rent, interest on capital, expenses on fuel and power, expenses on transportation and other types of production related costs. These costs are considered as out of pocket expenses. Money costs are also called as Prime Cost or Direct Cost or Accounting Cost or Explicit Cost.
(iv) Real cost: It refers to the payment made to compensate the efforts and sacrifices of all factor owners for their services in production. It includes the efforts and sacrifices of landlords in the use of land, capitalists to save and invest, and workers in foregoing leisure.
(v) Explicit Cost: Payment made to others for the purchase of factors of production is known as Explicit Costs. It refers to the actual expenditures of the firm to purchase or hire the inputs the firm needs. ego wages, payment of raw materials, rent, interest as capital. It is also called as Accounting Cost or Out of Pocket Cost or Money Cost.
(vi) Implicit Cost: Payment made to the use of resources that the firm already owns, is known as Implicit Cost. In simple terms, Implicit Cost refers to the imputed cost of a firm's self-owned and self-employed resources. A firm or producer may use his own land, building, machinery, car and other factors in the process of production. These costs are not recorded under normal accounting practices as no cash payments takes place. It is also called as Imputed Cost or Book Cost.

Total Revenue:
Total Revenue is the amount of income received by the firm from the sale of its product. It is obtained by multiplying the price of the commodity by the number of units sold.
Total Revenue - Constant Price

TR = P x Q
where,
TR denotes Total Revenue
P denotes Price and
Q denotes Quantity Sold.
When Price is Constant, the behaviour of TR is shown in above table and diagram assuming P = 5 when P = 5, TR = PQ.
When Price is declining with increase in quantity sold (E.g imperfect competition on the goods market) the behaviour of TR can be obtained from Demand function if Q = 11 - P
TR = P Q = 1 x 10 = 10
When P = 3, Q = 8 TR = 24
When P = 0, Q = 1 TR = 10
Total Revenue - Price declining

\(A R=\frac{T R}{Q}\)

\( M R=T R_{n}-T R_{n-1}\)

Constant AR & MR (fixed price)
When price remains constant, MR is also constant and AR / MR curves coincide.
Declining AR and MR
When a firm sells large quantities at lower prices both AR & MR will fall but the fall in MR will be steeper than the fall in AR.

(i) MR is lower than AR.
(ii) Both AR and MR slope downwards.
(iii) MR divides the distance between AR curve and axis into 2 equal parts.
(iv) The decline in AR need not be a straight line or linear.
(v) If the prices are declining with the increase in quantity sold, the AR can be nonlinear, taking a shape of concave or convex to the origin.

Average fixed cost:
1. It refers to the fixed cost per unit of output.
2. It declines as output increases as fixed cost is constant.
3. It never touches the axis.
4. It is rectangular hyperbola.

Average variable cost:
1. It is the variable cost per unit of output.
2. It initially declines and then increases with the increase of output
3. This is due to law of returns.
4. AVC curve is a 'U' shaped curve.

Average total cost or average cost:
1. It is got by dividing TC by Q or by adding AFC and AVC.
2. It is u shaped.
3. Initially it declines, reaches minimum when the plant is used optimally & rises beyond the optimum output.
4. This is due to the law of variable proportions.

Marginal cost:
1. It is the change in total cost resulting from producing one extra unit of output.
2. First it falls due to more efficient use of variable factors.
3. It increases after the lowest point and it slopes upward.
4. It is 'u' shaped.

\(\text { TC }=10+Q^{3}  \)
\(A C=\frac{10}{Q}+\frac{Q^{3}}{Q}=\frac{10}{Q}+Q^{2}=\frac{10}{5}+5^{2}=2+25=27  \)
\(\text {AVC }=\frac{Q^{3}}{Q}=Q^{2}=5^{2}=25  \)
\(\text {TFC }=10  \)
\(\text {AFC }=\frac{10}{\mathrm{Q}}=\frac{10}{5}=2 \)
\(Ans; \mathrm{AC}=27 ; \quad \mathrm{AVC}=25 ; \quad \mathrm{TFC}=10 ; \quad \mathrm{AFC}=2.\)