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Which of the Following Statements Are True Or False? Give Valid Reasons in Support of Your Answer. Total Cost Curve and Total Variable Cost Curve Are Parallel to Each Other - Economics

MCQ
True or False

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

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Solution

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.

Concept: Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
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