Which of the following is true of the total variable cost curve in the short run?
A)It depicts the law of decreasing returns to scale.
B)It is a straight line parallel to the horizontal axis.
C)It is independent of the production function.
D)It lies below the short-run total cost curve.

Question

Quizplus · Accepted Answer

The total variable cost curve in the short run lies below the short-run total cost curve because it only represents the variable costs of production, and not the fixed costs. Therefore, the correct option is D. Option A is not true as the total variable cost curve does not depict the law of decreasing returns to scale. Option B is also incorrect because the curve is typically upward sloping. Lastly, option C is not true as the total variable cost curve is based on the production function and the quantity of output produced.

Which of the Following Is True of the Total Variable