The vertical distance between the total variable cost curve and the total cost curve ________ as output increases; the vertical distance between the average variable cost curve and the average total cost curve ________ as output increases.
A) decreases; remains the same
B) is constant; becomes smaller
C) increases; becomes smaller at first but then increases
D) increases; remains the same

Question

Quizplus · Accepted Answer

The vertical distance between the total variable cost curve and the total cost curve is constant because it represents total fixed costs, which do not change with output. The vertical distance between the average variable cost curve and the average total cost curve becomes smaller as output increases because average fixed costs decrease as output increases, reducing the gap.

The Vertical Distance Between the Total Variable Cost Curve and the Total