Question

A total cost curve shows the largest amount of a product a firm can produce with a minimum cost.

True or False

Answer 1

Since total cost= Total fixed cost + total variable cost

Hence it can be said that it is not true that the total cost curve shows the largest amount of a product a firm can produce with a minimum cost. This is because as the output quantity increases, then upto certain output level, the Marginal cost of the output reaches its minimum points and after that marginal cost starts increasing. As a result the with the increase in the output beyond this level the MC starts increasing. Hence total cost also increasing. Hence it is not correct that if the firm produces largest quantity, then the total cost will be minimum.

Hence the given statement is false.