Figure 5.4
-In Figure 5.4, the difference between total costs and variable cost is
A) average total cost.
B) fixed cost.
C) total costs are positive when output is zero implying fixed costs.
D) all of the above.

Question

Figure 5.4
-In Figure 5.4, the difference between total costs and variable cost is
A) average total cost. 
B) fixed cost. 
C) total costs are positive when output is zero implying fixed costs. 
D) all of the above.

Quizplus · Accepted Answer

The difference between total costs and variable cost is the fixed cost. Therefore, option B is correct. Option A is incorrect as average total cost is calculated as total cost divided by output. Option C is partially correct, as total costs being positive when output is zero does imply fixed costs, but it does not provide a comprehensive answer. Therefore, option D is also incorrect.

Figure 5.4 -In Figure 5.4, the Difference Between Total Costs and Variable