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With the increase in production the gap between TC and TVC 1.goes on increasing 2.goes on diminishing 3.remains constant 4.sometime diminish and sometimes increase?
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With the increase in production the gap between TC and TVC 1.goes on i...
Effect of Increase in Production on TC and TVC
There is a direct relationship between total cost (TC) and total variable cost (TVC) in the short run. The production level affects both costs, and the relationship between these two costs depends on various factors. Let us discuss the effect of an increase in production on TC and TVC.
Initial Relationship between TC and TVC
Before discussing the effect of an increase in production on TC and TVC, let us first understand their initial relationship. In the short run, TVC increases with an increase in production, as more inputs are required to produce more output. However, TC also increases, but not at the same rate as TVC. This is because the fixed costs (FC) do not change in the short run. Therefore, the relationship between TC and TVC is as follows:
TC = FC + TVC
Effect of an Increase in Production on TC and TVC
Now, let us discuss the effect of an increase in production on TC and TVC:
1. Goes on increasing: If the increase in production requires more variable inputs than fixed inputs, then TVC will increase at a higher rate than TC. Therefore, the gap between TC and TVC will go on increasing.
2. Goes on diminishing: If the increase in production requires more fixed inputs than variable inputs, then TC will increase at a higher rate than TVC. Therefore, the gap between TC and TVC will go on diminishing.
3. Remains constant: If the increase in production requires an equal increase in both variable and fixed inputs, then TC and TVC will increase at the same rate. Therefore, the gap between TC and TVC will remain constant.
4. Sometimes diminish and sometimes increase: If the increase in production requires different combinations of fixed and variable inputs at different levels of production, then the gap between TC and TVC may sometimes diminish and sometimes increase.
Conclusion
In conclusion, the effect of an increase in production on TC and TVC depends on various factors such as the nature of inputs, the level of production, and the short-run period. Therefore, it is essential to understand the relationship between TC and TVC to make informed decisions about production levels and cost management.
There is a direct relationship between total cost (TC) and total variable cost (TVC) in the short run. The production level affects both costs, and the relationship between these two costs depends on various factors. Let us discuss the effect of an increase in production on TC and TVC.
Initial Relationship between TC and TVC
Before discussing the effect of an increase in production on TC and TVC, let us first understand their initial relationship. In the short run, TVC increases with an increase in production, as more inputs are required to produce more output. However, TC also increases, but not at the same rate as TVC. This is because the fixed costs (FC) do not change in the short run. Therefore, the relationship between TC and TVC is as follows:
TC = FC + TVC
Effect of an Increase in Production on TC and TVC
Now, let us discuss the effect of an increase in production on TC and TVC:
1. Goes on increasing: If the increase in production requires more variable inputs than fixed inputs, then TVC will increase at a higher rate than TC. Therefore, the gap between TC and TVC will go on increasing.
2. Goes on diminishing: If the increase in production requires more fixed inputs than variable inputs, then TC will increase at a higher rate than TVC. Therefore, the gap between TC and TVC will go on diminishing.
3. Remains constant: If the increase in production requires an equal increase in both variable and fixed inputs, then TC and TVC will increase at the same rate. Therefore, the gap between TC and TVC will remain constant.
4. Sometimes diminish and sometimes increase: If the increase in production requires different combinations of fixed and variable inputs at different levels of production, then the gap between TC and TVC may sometimes diminish and sometimes increase.
Conclusion
In conclusion, the effect of an increase in production on TC and TVC depends on various factors such as the nature of inputs, the level of production, and the short-run period. Therefore, it is essential to understand the relationship between TC and TVC to make informed decisions about production levels and cost management.
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With the increase in production the gap between TC and TVC 1.goes on increasing 2.goes on diminishing 3.remains constant 4.sometime diminish and sometimes increase?
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With the increase in production the gap between TC and TVC 1.goes on increasing 2.goes on diminishing 3.remains constant 4.sometime diminish and sometimes increase? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about With the increase in production the gap between TC and TVC 1.goes on increasing 2.goes on diminishing 3.remains constant 4.sometime diminish and sometimes increase? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With the increase in production the gap between TC and TVC 1.goes on increasing 2.goes on diminishing 3.remains constant 4.sometime diminish and sometimes increase?.
With the increase in production the gap between TC and TVC 1.goes on increasing 2.goes on diminishing 3.remains constant 4.sometime diminish and sometimes increase? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about With the increase in production the gap between TC and TVC 1.goes on increasing 2.goes on diminishing 3.remains constant 4.sometime diminish and sometimes increase? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for With the increase in production the gap between TC and TVC 1.goes on increasing 2.goes on diminishing 3.remains constant 4.sometime diminish and sometimes increase?.
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