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All In Cost
total costthe 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).
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.