- This topic has 3 replies, 2 voices, and was last updated 2 years ago by
.
-
Posts
-
Why is it graph D instead of B?
I understand that as your quantity increases so does total cost as variable costs increases. However, why is it graph D instead of B?
Because the drop in the variable cost applies retrospectively (i.e. to all the units, not just the new ones) the line after the fall in price must go through the origin (i.e. zero total cost for zero units).
This is the case in D but is not the case in B.
Thanks for taking the time to answer my question. I do understand the points you are trying to make but how did you know it was graph D because the difference between these two graphs to me is just the gradient.
If you look at the line in D, if you extend it ‘backwards’ then it goes through the origin (zero production and zero total cost). This is not the case with the line in B.
It must go through the origin because of it applying to all units retrospectively. If it had always applied to all units then it would go through the origin.
- You must be logged in to reply to this topic.