total cost

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Total cost

The price paid for a security plus the broker's commission and any accrued interest that is owed to the seller (in the case of a bond).

All In Cost

The total cost of a transaction after commissions, interest rates, and other expenses. For example, a student loan has a principal and interest rate, but the all in cost may include an origination fee, a federal default fee, and other expenses.

total cost

The total amount of money expended to establish an investment position. Total cost includes commissions, accrued interest, and taxes, in addition to the principal amount of securities traded.
Total costclick for a larger image
Fig. 185 Total cost

total cost

the COST of all the FACTORS OF PRODUCTION used by a firm in producing a particular level of output. In the SHORT RUN, a firm's total cost consists of total FIXED COST and total VARIABLE COST.

The short-run total cost curve in Fig. 185 is the sum of the (constant) total fixed costs and the total variable cost. It has an S shape because at low levels of output total variable costs rise slowly (because of the influence of increasing RETURNS TO THE VARIABLE-FACTOR INPUT) while at high levels of output total variable costs rise more rapidly (because of the influence of diminishing returns to the variable-factor input).

Total cost interacts with TOTAL REVENUE in determining the level of output at which the firm achieves its objective of PROFIT MAXIMIZATION and LOSS MINIMIZATION.

In the THEORY OF MARKETS, a firm will leave a market if in the short run it cannot earn sufficient total revenue to cover its total variable costs. If it can generate enough total revenue to cover total variable costs and make some contribution towards total fixed costs, then it will continue to produce in the short run even though it is still making a LOSS. In the LONG RUN, the firm must earn enough total revenue to cover total variable and total fixed costs (including NORMAL PROFIT) or it will leave the market. See

MARGINAL COST. total domestic expenditure the total expenditure by residents of a country on FINAL PRODUCTS (excluding expenditure on INTERMEDIATE PRODUCTS). When expenditure on IMPORTS is deducted from this figure and expenditure by nonresidents on domestically produced goods and services is added (EXPORTS), the adjusted expenditure provides an estimate of GROSS NATIONAL PRODUCTS. See also NATIONAL INCOME ACCOUNTS.

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The framework is illustrated graphically in Figure 3, where the total costs and total benefits previously illustrated in Figures 1 and 2 are now compared.
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