Question

Explain whether the statement is true or false with reasons.

Total cost curve and Total variable cost curve are parallel to each other.

Options

• True

• False

Answer 1

Total cost curve and Total variable cost curve are parallel to each other: This statement is true.

This is because the difference between total cost and total variable cost is a total fixed cost which remains fixed irrespective of the level of output. Hence, the distance between the total cost curve and the total variable cost curve remains the same throughout all the levels of output.