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What Are Costs?
The firm incurs a variety of costs when it produces and we split these in various ways. One way is to split them into fixed costs and variable costs:
·Fixed costs - these are costs that do not vary as the level of production varies. These include such things as rent, business rates and security costs.
·Variable costs - these are costs that do vary as output varies and so will include things like raw materials, labour costs, energy costs and so on.
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