Identifying fixed and variable costs from total cost data

Steps:

• Note total cost at 0 output: $40, which is fixed cost (FC).
• Compute variable cost (VC) = total cost - FC for each output.
• VC at 10 units: $100 -$40 = $60; at 20:$120 - $40 =$80; at 30: $150 -$40 = $110.
• VC rises with output while FC stays constant at $40.

Why C is correct:

• Fixed costs are unavoidable costs present even at zero output; here, $40 at 0 units confirms the firm has fixed costs.

Why the others are wrong:

• A: Total revenue at 20 units is 20 × $6 =$120, matching total cost, so profit is zero (no profit made), making A true—but the question likely focuses on cost structure.
• B: Total cost at 0 output is $40 > 0, so fixed costs exist, contradicting no fixed costs.
• D: VC increases from $0 to$110 across outputs, not falling.

Final answer: C