Figure 9.4 Figure 9.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 9.4.The area that represents the total fixed cost of production is _____.

Question

Figure 9.4  Figure 9.4 shows short-run cost and demand curves for a monopolistically competitive firm in the market for designer watches.
-Refer to Figure 9.4.The area that represents the total fixed cost of production is _____.

Quizplus · Accepted Answer

The total fixed cost of production is represented by the distance between the y-axis and the total cost curve at any level of output. In this case, the total fixed cost is represented by the distance between point S1U1B0 and point S1U1B11 on the y-axis. Therefore, the correct option is C which includes points PS1U1B11 and PS1U1B13, which represent the two boundaries of the fixed cost area.

Figure 94 Figure 9