The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client.Table 9.2

-Graphically, a firm's total cost is equal to the area of the:
A)triangle formed under the demand curve.
B)rectangle formed under the demand curve at a given price and quantity combination.
C)rectangle formed under the average-total-cost curve at a given ATC and quantity combination.
D)triangle formed by a line segment between the demand and average-total-cost curves.
E)triangle formed by a line segment between the horizontal axis and the average-total-cost curves.

Question

The table given below reports the marginal revenue and marginal cost of Holmes Detective Agency for each client.Table 9.2
 
-Graphically, a firm's total cost is equal to the area of the:
A)triangle formed under the demand curve. 
B)rectangle formed under the demand curve at a given price and quantity combination. 
C)rectangle formed under the average-total-cost curve at a given ATC and quantity combination. 
D)triangle formed by a line segment between the demand and average-total-cost curves. 
E)triangle formed by a line segment between the horizontal axis and the average-total-cost curves.

Quizplus · Accepted Answer

The area of the rectangle formed under the average-total-cost curve at a given ATC and quantity combination represents the total cost of production for a firm. This is because the ATC curve represents the average cost per unit of output, and multiplying this by the quantity produced gives the total cost. Therefore, option C is the correct choice. The other options are not correct because they do not accurately represent the relationship between cost and output for a firm.

The Table Given Below Reports the Marginal Revenue and Marginal