Identifying Cost Curves from Definitions

Steps:

• Recall TC = TFC + TVC; TFC remains constant regardless of output, appearing as a horizontal line.
• TVC starts at zero output and rises with production, forming an upward curve from the origin.
• TC begins at the TFC level and rises parallel to TVC, shifted upward by the fixed cost amount.
• Match diagram labels: W as the uppermost rising curve (TC), X as the origin-based rising curve (TVC), Y as the horizontal line (TFC).

Why B is correct:

• B aligns with the formula TC = TFC + TVC, where TC exceeds TVC by the constant TFC, matching typical curve positions.

Why the others are wrong:

• A: Swaps TVC and TFC, ignoring TFC's horizontal nature.
• C: Misplaces TC as horizontal, contradicting its variable component.
• D: Confuses TVC with fixed costs, violating TVC's output dependence.

Final answer: B