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Draw TVC, TC, and TFC curves in a single diagram. |
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Answer» Solution :(i) TC is divided into two PARTS TFC and TVC such that `TC = TFC + TVC`. (ii) TFC is the overhead cost and it remains constant or fixed whatever be the level of output. TFC curve is a horizontal line parallel to the x-axis. (iii) TVC is cost due to increased use of VARIABLE FACTORS like RAW material, labour, etc. TVC is inverse S-shaped starting from the origin due to law of variable proportion. (iv) TC is aggregate of TFC and TVC. TC curve is inverse S-shaped starting from the level of fixed cost. The reason BEHIND it shape is the law of variable proportion. 
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