Different types of costs faced by firms include:
SET UP COSTS: the costs involved in setting up a business. Premises and stock are examples
FIXED COSTS: costs which do not change with output. Rent and interest payments are examples
VARIABLE COSTS:costs which do change with output. Material costs are the best example.
EXTERNAL COSTS: affect people outside
the business. Pollution, traffic and noise are examples. There are also
external benefits from business which include employment and wealth created
in the area.