Costs of production are the payments a firm makes to produce output, from wages and raw materials to rent and insurance. Some are total costs: total fixed cost ($TFC$), total variable cost ($TVC$), and total cost ($TC$). Others are per-unit costs: average fixed cost ($AFC$), average variable cost ($AVC$), average cost ($AC$), and marginal cost ($MC$). These measures matter because they influence output decisions, pricing, profit, and whether a firm can stay competitive.