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At an output of 10,000 units per year, a firm's total variable costs are $50,000 and its average fixed costs are $2. The total costs per year for the firm are.
DEFINITION of 'Production Cost'. A cost incurred by a business when manufacturing a good or producing a service. Production costs combine raw material and labor.To figure out the cost of production per unit, the cost of production is divided by the number of units produced.roduction costs combine raw material and labor. To figure out the cost of production per unit, the cost of production is divided by the number of units produced.