Refer to Figure 13-4. Which of the following figures best represents the total cost curve for a typical firm in the short run?

• A. A U-shaped curve with total cost decreasing and then increasing as output rises
• B. An upward-sloping curve that becomes steeper as output increases
• C. A downward-sloping curve as output increases
• D. A horizontal line indicating constant total cost regardless of output

Answer: (B)

Verified step by step guidance

1. Understand that the total cost (TC) curve in the short run reflects how total costs change as output (Q) changes, considering fixed and variable costs.
2. Recall that total cost is the sum of total fixed cost (TFC) and total variable cost (TVC), where TFC is constant regardless of output and TVC typically increases as output increases.
3. Recognize that in the short run, due to diminishing marginal returns, the variable cost increases at an increasing rate as output rises, causing the total cost curve to become steeper.
4. Visualize the total cost curve starting at the level of total fixed cost when output is zero, then rising upward as output increases, with the slope increasing due to rising marginal costs.
5. Conclude that the total cost curve is upward sloping and becomes steeper as output increases, which matches the description of an upward-sloping curve that becomes steeper as output increases.