TC (Total cost) curve is the sum total of the total fixed cost and the total variable cost incurred in producing a given amount of output. In other words TC = TFC + TVC. Since Total Fixed Cost (TFC) remains constant regardless of the quantity of output and Total Variable Cost changes with the change in level of output, so at zero levels of output TFC exists but TVC is zero, therefore, TC curve originate not from origin ‘O’ but from the point on OY axis where TFC intersects (refer to the diagram). Since TVC is zero when output is zero, so it starts from the origin as shown in the adjacent diagram.
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Now, let's delve into the article's concepts related to the Total Cost (TC) curve. The Total Cost curve is a fundamental concept in economics, representing the overall cost incurred in producing a specific quantity of output. It's calculated by adding the Total Fixed Cost (TFC) and the Total Variable Cost (TVC), expressed as TC = TFC + TVC.
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Total Fixed Cost (TFC): TFC is the cost that remains constant irrespective of the level of output. This means even when the production is zero, TFC persists. In the article, it mentions that TFC is represented by the point where it intersects the OY axis in the diagram. This is a crucial concept as it forms the baseline for the TC curve.
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Total Variable Cost (TVC): TVC, on the other hand, fluctuates with changes in the level of output. When the output is zero, TVC is also zero. The article notes that the TVC curve starts from the origin, indicating that at zero levels of output, there are no variable costs. As production increases, TVC comes into play, influencing the upward slope of the TC curve.
Understanding the interplay between TFC and TVC is essential for comprehending how costs evolve as production levels change. The article's emphasis on the graphical representation of the TC curve provides a visual understanding of these cost components, enhancing the overall grasp of economic principles related to production and cost analysis. If you have any specific questions or if there's another concept you'd like me to elaborate on, feel free to ask.
