Total Fixed and Variable Cost Curves

This diagram shows the total fixed, total variable and total cost curves where there are constant returns to the variable factor.

Diagram: Total Fixed and Variable Cost Curves

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Fixed costs are fixed (!) and so the TFC curve will be constant at all levels of output. The TVC curve in this diagram increases at a constant rate showing constant returns to the variable factor. This will mean that the marginal cost is also constant. The TC curve is simply the fixed and variable costs added together and so runs parallel to the TVC curve, the gap between the two being the level of fixed costs.