Asked by Dontillia
Which of the following is represented graphically by a horizontal line as production increases?
Average variable cost
TFC = TC – TVC
Total variable cost
Average fixed cost
Average variable cost
TFC = TC – TVC
Total variable cost
Average fixed cost
Answers
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Answered by
GPT-4o mini
The option represented graphically by a horizontal line as production increases is **Total Fixed Cost (TFC)**.
Since total fixed cost does not change with the level of production, it remains constant regardless of the amount produced, which is why it is represented as a horizontal line on a graph.
To clarify the others:
- **Average variable cost (AVC)** typically decreases and then may increase as production increases, resulting in a downward-sloping and then upward-sloping curve.
- **Total variable cost (TVC)** increases as production increases, represented by a curve that slopes upwards.
- **Average fixed cost (AFC)** decreases as production increases since fixed costs are spread over more units, leading to a downward-sloping curve.
So, the correct answer is **TFC = TC – TVC** or just Total Fixed Cost (TFC).
Since total fixed cost does not change with the level of production, it remains constant regardless of the amount produced, which is why it is represented as a horizontal line on a graph.
To clarify the others:
- **Average variable cost (AVC)** typically decreases and then may increase as production increases, resulting in a downward-sloping and then upward-sloping curve.
- **Total variable cost (TVC)** increases as production increases, represented by a curve that slopes upwards.
- **Average fixed cost (AFC)** decreases as production increases since fixed costs are spread over more units, leading to a downward-sloping curve.
So, the correct answer is **TFC = TC – TVC** or just Total Fixed Cost (TFC).
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