Final answer:
The question relates to the interpretation of fixed and variable costs in the production process of Vinnie's painting business. Fixed costs remain constant regardless of the level of production, while variable costs increase as more houses are painted. These costs combined equal the total cost of production.
Step-by-step explanation:
The question involves understanding fixed and variable costs in a business context, particularly as they pertain to Vinnie's painting company. Fixed costs, such as the $250 Vinnie spends regardless of output, do not change with production levels. On the other hand, variable costs increase with each additional house painted. As production - in this case, the number of houses painted - goes up, we add these variable costs to the fixed costs to calculate the total cost.
Using the information provided as a reference, we can illustrate this with an example similar to the one about the computer company. If the company has fixed costs of $250 and varying marginal costs for each additional unit produced, the total cost would be the sum of fixed costs plus the sum of the marginal costs for the number of units produced. This reflects the relationship depicted in Figure 7.7, where the vertical intercept of the total cost curve represents fixed costs, and the curve's upward slope indicates increasing total costs as more output is produced.