In the graph below, which depicts the relationship between units produced and total cost, the dotted line depicts which type of total cost?
A) Variable cost
B) Fixed cost
C) Mixed cost
D) None of these

Question

In the graph below, which depicts the relationship between units produced and total cost, the dotted line depicts which type of total cost? 
A) Variable cost 
B) Fixed cost 
C) Mixed cost 
D) None of these

Quizplus · Accepted Answer

The dotted line in the graph depicts the variable cost. This is because the variable cost increases with an increase in the number of units produced. As the number of units produced increases, the variable costs such as raw material, labor cost, etc. also increase accordingly. The fixed costs, on the other hand, remain constant irrespective of the number of units produced and are represented by a straight horizontal line in the graph. Mixed costs are a combination of both fixed and variable costs and are not represented by a single line in the graph. Therefore, the best choice is A) Variable cost.

In the Graph Below, Which Depicts the Relationship Between Units