Costs: 

In the short run, there are two types of costs: fixed and variable. Fixed costs are the costs of those inputs that cannot change in the short run; because these costs are inflexible in this way, they are independent of the amount of output. Costs such as rent on buildings and payments on machinery are fixed costs.

Variable costs are the costs of those inputs that vary with the amount of output produced. To produced ice cream for instance, variable costs would include wages, as well as the cost of raw materials. As the marginal product gained from additional units of input eventually declines, the cost of output increases, first at a decreasing rate, then at an increasing rate. Other costs relevant to production are average total cost (ATC), average variable cost (AVC) average fixed cost (AFC) and marginal cost.

Average total cost: average total cost is nothing but total cost (TC) divided by number of units of output (Q).

ATC=TC/Q

We also know that Average Total Cost is a sum of average fixed cost and Average Variable Cost

ATC= AFC + AVC

Average fixed cost: Average fixed cost (AFC) is an economics term used to describe the total fixed costs (TFC) divided by the quantity (Q) of units produced.

AFC = TFC/Q

Average fixed cost is a per-unit measure of fixed costs. As the total number of goods produced increases, the average fixed cost decreases because the same amount of fixed costs are being spread over a larger number of units.

Average variable cost: average variable cost is the total variable costs divided by the number of units of output.

AVC = TVC/Q

Marginal cost is the cost of producing one more unit of output. When marginal product falls, marginal cost rises.

MC = Change in Total Cost / Change in output (Q)

In the long run, however, all costs are variable.