Why are Total Cost curve and Variable Cost curve parallel to each other?
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Total Cost Curve is always parallel to Total Variable Cost Curve because of Total Fixed Cost Curve. There are 2 kinds of costs: TFC and TVC.Thus, Total Cost is the sum of TVC and TFC. As TFC is constant, thus the only difference between TC and TVC is TFC which makes the curves parallel to each other.
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The total cost curve and variable cost curve are parallel to each other because the difference between total cost and total variable cost is equal to total fixed cost.
What is the relation between total cost and variable cost?
- Total cost is equal to the total sum of fixed and variable cost whereas variable cost changes with the change in the number of goods produced
- Total cost is related to variable expenses of any company whereas variable cost increases the production of any company
- Total cost is very essential for any company whereas the variable cost affect the company's expenses
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