Exhibit 7.2

-Refer to Exhibit 7.2,which shows different cost curves.What does the difference between curve A and curve B at a total cost of $500 and an output of 9 represent?

Question

Exhibit 7.2
 
-Refer to Exhibit 7.2,which shows different cost curves.What does the difference between curve A and curve B at a total cost of $500 and an output of 9 represent?

Quizplus · Accepted Answer

The difference between curve A and curve B at any given level of output represents the fixed cost. This is because curve A shows the total cost, which includes both variable and fixed costs, while curve B shows the total variable cost. The fixed cost does not change with the level of output, hence the vertical distance between the two curves at any level of output is the fixed cost.

Exhibit 7.2 -Refer to Exhibit 7.2,which Shows Different Cost Curves.What Does the Cost