Final answer:
Within the relevant range of activity, fixed costs remain constant in total, while total variable costs change. The relevant range of activity can be approximated by a straight line, although the actual shape of the cost curve can vary across industries and firms.
Step-by-step explanation:
In the relevant range of activity, fixed costs remain constant in total. This means that regardless of the level of production, the total amount of fixed costs will not change. For example, if a company has fixed costs of $200 per month, it will incur the same $200 even if it produces more or less. However, it's important to note that fixed costs per unit will decrease as production increases, as the fixed costs are distributed over a larger number of units.
On the other hand, variable costs do change within the relevant range of activity. Variable costs are costs that vary with the level of production. For example, if a company produces more units, it will incur higher variable costs, such as the cost of raw materials or labor.
The relevant range of activity is the range in which a company expects to operate. It is approximated by a straight line in some cases, especially when the fixed costs do not change within this range. However, it is important to note that the actual shape of the cost curve can vary across industries and firms.