Variable costs as the difference between total and fixed costs

Steps:

• Identify total cost (TC) at output S as the height from origin to the TC curve.
• Identify fixed cost (FC) at output S as the constant height of the FC line.
• Subtract FC from TC vertically to find variable cost (VC = TC - FC).
• Locate the distance QS, which spans from FC to TC at S.

Why D is correct:

• QS measures VC directly, per the definition VC = TC - FC in cost curve diagrams.

Why the others are wrong:

• A. PQ: Likely represents a segment of TC unrelated to VC alone.
• B. PS: May indicate output level on x-axis, not a cost distance.
• C. OR: Represents fixed costs from origin to FC line.

Final answer: D