Total Fixed Cost (TFC)

Total fixed Costs are those costs that not vary with the output. They will be the same if output is zero or units or 1 million units. Thus, they are totally unaffected by the changes in rate of outputs. Examples of fixed costs are: (i) Initial establishment expenses, (ii) Rent of the factory, (iii) Expenses on the maintenance of machinery, (iv) Wages and salaries of the permanent staff, (v) Interests on bonds, (vi) Insurance premium.

TFC = quantities of the fixed productive service X factor price.

Total fixed cost of a firm is illustrated in the following table and TFC

  Units of output                   TFC (Rs)
0                                             200

1                                             200

2                                             200

3                                             200

4                                             200

5                                             200

Curve is a horizontal curve parallel to the X-axis that tells us that total fixed cost remains the same at all levels of output.

One thought on “Total Fixed Cost (TFC)”

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