Read the following statements - Assertion (A) and Reason (R):
Assertion (A): In short run, change in Total Cost occur due to change in Total Fixed Cost and Total Variable Cost.
Reason(R) : TC= TFC + TVC
From the given alternatives choose the correct one:
Answer & explanation
Correct answer: option 4
The correct answer is option 4: Assertion (A) is false but Reason (R) is true.
- Total Cost (TC) = Total Fixed Cost (TFC) + Total Variable Cost (TVC) (Reason R is correct).
- However, in the short run, Total Fixed Cost (TFC) remains constant, meaning any change in Total Cost (TC) occurs only due to changes in Total Variable Cost (TVC), not TFC.
- Since Assertion (A) incorrectly states that TC changes due to both TFC and TVC in the short run, it is false.