The vertical distance between the total cost curve and the total variable cost curve ________ as output increases and the vertical distance between the average total cost curve and average variable cost curve ________ as output increases.
A) is constant; decreases
B) decreases; is constant
C) increases; decreases
D) decreases; increases
E) decreases; decreases

Question

Quizplus · Accepted Answer

The vertical distance between the total cost curve and the total variable cost curve represents total fixed cost, which is constant regardless of output. The vertical distance between the average total cost curve and average variable cost curve decreases as output increases because spreading the fixed cost over more units reduces the average fixed cost per unit.

The Vertical Distance Between the Total Cost Curve and the Total