In the figure below, output is on the X-axis and costs are on the Y-axis. Three short run cost curves are labelled 1, 2 and 3.
Which of the following correctly names the curves?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 1 – TC, 2 – TVC, 3 – TFC
Read each curve at zero output and how it moves as output rises.
Curve 3 is flat: the cost is the same at every output, so it is TFC.
Curve 2 starts from the origin and rises: at zero output nothing is spent on variable inputs, so it is TVC.
Curve 1 starts at the height of TFC and stays above TVC by that same gap: it is TC = TVC + TFC.
NCERT (2026-27): “Shapes of the Short Run Cost Curves … Figure 3.3 illustrates the shapes of total fixed cost, total variable cost and total cost curves for a typical firm. We place output on the x-axis and costs on the y-axis. TFC is a constant which takes the value c1 and does not change with the change in output. It is, therefore, a horizontal straight line cutting the cost axis at the point c1. At q1, TVC is c2 and TC is c3.”
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