The Vertical Distance Between the Total Variable Cost Curve and the Total

question 183

Multiple Choice

The vertical distance between the total variable cost curve and the total cost curve ________ as output increases; the vertical distance between the average variable cost curve and the average total cost curve ________ as output increases.

• A) decreases; remains the same
• B) is constant; becomes smaller
• C) increases; becomes smaller at first but then increases
• D) increases; remains the same

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Definitions:

Variable Expense

Costs that change in amount from one period to another, affected by various factors like usage or market conditions.

Recurring Expense

An ongoing financial cost that repeats at regular intervals, such as monthly or yearly.

Variable Expense

Costs or expenses that change in proportion to business activity.

Electric Bill

A monthly statement charging an individual or household for the consumption of electricity provided by a utility company.