Question

When graphed, a typical fixed cost appears as:

A. a horizontal line.
B. a vertical line.
C. a u-shaped line.
D. a diagonal line that slopes downward to the right.
E. a diagonal line that slopes upward to the right.

Answer 1

A typical fixed cost appears as a horizontal line(a) on a graph because it remains constant regardless of the level of production.

Step-by-step explanation:

When graphed, a typical fixed cost appears as a horizontal line(a) because it does not change with the level of output produced. Fixed costs are the costs incurred when output is zero, so there are no variable costs. As production increases, variable costs are added to fixed costs, and the total cost is the sum of the two. However, the fixed cost component remains constant regardless of the quantity produced, which is why it's represented by a horizontal line at the level of the fixed costs on a graph. In contrast, average and marginal cost curves tend to be U-shaped due to economies and diseconomies of scale influencing the costs as production volume changes.