Part 1The graph shows a firm's average fixed cost curve and average variable cost curve. Draw a curve that is approximately the firm's average total cost curve. Label it.Click toenlargegraph Part 1Choose the statement that is correct. A. (TC/Qminus−TFC/Q) increases over all values of output B. ATC/Q = TC C. ATC = AVCminus−AFC D. TC/Q = TFC/Q + TVC/Q Part 1
051015202530012345Output (jars per day)Cost (dollars per jar)AFCAFCAVCAVC ATCATC Edit coordinates interactive graph Draw only the objects specified in the question.

Question

Part 1The graph shows a​ firm's average fixed cost curve and average variable cost curve. Draw a curve that is approximately the​ firm's average total cost curve. Label it.Click toenlargegraph Part 1Choose the statement that is correct. A. ​(​TC/Qminus−​TFC/Q​) increases over all values of output B. ​ATC/Q = TC C. ATC​ = AVCminus−AFC D. ​TC/Q​ = ​TFC/Q +​ TVC/Q Part 1
051015202530012345Output (jars per day)Cost (dollars per jar)AFCAFCAVCAVC ATCATC Edit coordinates interactive graph​>>> Draw only the objects specified in the question.

BlackTom AI · Accepted Answer

First, let's restate the question and options in plain terms so we know what we are evaluating.
Question: Choose the statement that is correct about cost curves. Options:
A. (TC/Q − TFC/Q) increases over all values of output
B. ATC/Q = TC
C. ATC = AVC − AFC
D. TC/Q = TFC/Q + TVC/Q

Now, analyze each option one by one.
Option A: (TC/Q − TFC/Q) increases over all values of output.
- Recognize what TC/Q and TFC/Q represent. TC/Q is the average total cost, and TFC/Q is the average fixed cost. Their difference is AVC, the average variable cost.
- The statement claims AVC increases for all output levels. In many cost curves, AVC can decline at low outputs due to spreading fixed costs over more units and then rise as diminishing returns set in. Therefore, AVC does not necessarily increase over all output ranges. This makes Option A false.

Option B: ATC/Q = TC.
- ATC is average total cost, defined as TC divided by quantity Q, i.e., ATC = TC/Q. The left-hand side ATC/Q would be TC/Q divided by Q, which is TC divided by Q^2, not equal to TC in general. This is dimensionally and conceptually incorrect. Hence, Option B is false.

Option C: ATC = AVC − AFC.
- The correct relationship is ATC = AVC + AFC, not minus. Subtracting AFC from AVC would give a value smaller than AVC, which contradicts the standard cost decomposition. Therefore, Option C is false.

Option D: TC/Q = TFC/Q + TVC/Q.
- This matches the fundamental cost identity: total cost per unit (ATC) equals fixed cost per unit plus variable cost per unit. Since TC/Q is ATC, TFC/Q is AFC, and TVC/Q is AVC, this equation is the correct decomposition of average total cost. This makes Option D true.

To summarize the reasoning pattern:
- Options A, B, and C each contain a misapplication or misstatement of the cost relationships, contradicting standard definitions of ATC, AVC, AFC, and TC. The only statement that aligns with basic cost accounting identities is Option D, which correctly expresses ATC as the sum of per-unit fixed costs and per-unit variable costs.

Homework:ch11_qz2

View Explanation

Log in for full answers

Similar Questions

If a firm's average total cost decreases as the firm increases its output, the firm's marginal cost must be

When the average total cost curve is at its minimum, we know that the

In the short run, ATC curve and AVC curve converge as output increases because

When the average variable cost curve is upward sloping, the marginal cost curve:

When the average variable cost curve is upward sloping, the marginal cost curve:

If the marginal cost curve is U-shaped,

In the diagram, A represents a firm's ___ curve, B represents its _ curve, and C represents its ___ curve.

If a new tax on capital increases a firm’s fixed cost of production, which of the following will occur in the short run?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler

Homework:ch11_qz2

View Explanation

Log in for full answers

Similar Questions

If a firm's average total cost decreases as the firm increases its output, the firm's marginal cost must be

When the average total cost curve is at its minimum, we know that the

In the short run, ATC curve and AVC curve converge as output increases because

When the average variable cost curve is upward sloping, the marginal cost curve:

When the average variable cost curve is upward sloping, the marginal cost curve:

If the marginal cost curve is U-shaped,

In the diagram, A represents a firm's _____ curve, B represents its _____ curve, and C represents its _____ curve.

If a new tax on capital increases a firm’s fixed cost of production, which of the following will occur in the short run?

More Practical Tools for Students Powered by AI Study Helper

Making Your Study Simpler

In the diagram, A represents a firm's ___ curve, B represents its _ curve, and C represents its ___ curve.