57. Refer to the provided graph of cost curves. Total fixed cost at output level Q2 is measured by

A. 0C.
B. AC.
C. CD.
D. DE.

Question

57.    Refer to the provided graph of cost curves. Total fixed cost at output level Q2 is measured by

A. 0C.
B. AC.
C. CD.
D.  DE.

BlackTom AI · Accepted Answer

Total fixed cost at any output equals the vertical difference between the total cost (TC) curve and the total variable cost (TVC) curve because TC = TFC + TVC, so TFC = TC − TVC.

1) Relevant knowledge points and concepts
- Total cost (TC) is the sum of total fixed cost (TFC) and total variable cost (TVC).
- For a given output Q, TFC = TC(Q) − TVC(Q). Graphically this is the vertical distance between the TC and TVC curves at that output.
- The horizontal TFC line shown on the graph represents fixed cost (constant across output).

2) Step‑by‑step reasoning
- Focus on the vertical dotted line at Q2. Follow it upward to the TVC curve and to the TC curve.
- Identify the vertical positions where the dotted line meets TVC and TC. Those two points mark the TVC(Q2) and TC(Q2) values respectively.
- The vertical segment joining those two points measures TC(Q2) − TVC(Q2), which equals TFC.

3) Intermediate (algebraic) step
- TC(Q2) = value at the intersection of the TC curve and the Q2 vertical.
- TVC(Q2) = value at the intersection of the TVC curve and the Q2 vertical.
- TFC = TC(Q2) − TVC(Q2) = (upper point) − (lower point) = the vertical segment labeled CD on the diagram.

4) Why the correct answer is correct
- The diagram labels the two relevant intersection heights so that the vertical distance at Q2 is the segment CD. This exactly represents TC − TVC at Q2, i.e., total fixed cost.

5) Why the other options are incorrect
- A (0C): the segment from the origin to C measures the TVC at Q2 (or a variable cost measure), not fixed cost.
- B (AC): the segment A to C is between the TFC horizontal line and the TVC level; that is not TC − TVC, so it does not represent total fixed cost.
- D (DE): this is a vertical distance between two higher horizontal ticks (or between TC values at different points) and does not correspond to TC(Q2) − TVC(Q2).

6) Conclusion
Therefore the total fixed cost at output level Q2 is measured by CD, confirming answer C.

57. Refer to the provided graph of cost curves. Total fixed cost at output level Q2 is measured by A. 0C. B. AC. C. CD. D. DE.Single choice

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