Which of the following statements is correct?
A) Total fixed cost plus total variable cost equals total cost.
B) As output increases, total cost and total fixed cost increase by the same amount.
C) As output increases, total cost and total fixed cost increase but not necessarily by the same amount.
D) As output increases, total cost increases and total fixed cost decreases.

Question

Quizplus · Accepted Answer

Total cost is the sum of total fixed cost and total variable cost. Fixed costs do not change with the level of output, while variable costs do. Therefore, as output changes, the total cost changes due to the variable cost component, not the fixed cost component.

Which of the Following Statements Is Correct