Final answer:
The total cost curve is indeed the sum of the total variable cost and total fixed cost; fixed costs are incurred even at zero output, while variable costs change with production levels, making the statement true.
Step-by-step explanation:
The statement that the total cost curve is the vertical sum of the total variable cost and total fixed cost is true. In business, fixed costs do not change with the quantity of output produced and are always shown as the vertical intercept of the total cost curve since they are costs incurred even when output is zero. Variable costs, on the other hand, vary with the level of output. As production increases, variable costs are added to fixed costs, and the total cost incorporates both these components.
The relationship between quantity of output and costs can also be shown on a per-unit basis, with the calculation of average total costs (ATC) by dividing total cost by the total quantity produced, with the ATC curve typically being U-shaped. Marginal cost (MC), another important concept in the study of cost curves, is calculated by the change in total cost divided by the change in output, with the MC curve generally being upward-sloping.
The statement is true. The total cost curve is indeed the vertical sum of the two curves, total variable cost and total fixed cost. Total fixed cost represents the costs that are incurred regardless of the level of production, while total variable cost represents the costs that vary with the level of production. When we add these two curves together, we get the total cost curve, which shows the total costs incurred at different levels of production.