<p>That is because your figure is not drawn to scale. Take the following cost function:</p>
<p><span class="math-container">\begin{align}
TC(q) = \underbrace{[(q-4)^3 +64]}_{VC(q)} + \underbrace{36\vphantom{q}}_{FC} 
\end{align}</span>
where the <span class="math-container">$+64$</span> term is to ensure that <span class="math-container">$VC(0)=0$</span>.</p>
<p>The associated cost curves are <a href="https://www.desmos.com/calculator/xvxbupg22e" rel="nofollow noreferrer">plotted</a> below. By simple eyeballing, the green area under the MC is the same as the area of the purple rectangle. Of course, this can be verified analytically using the above equation.</p>
<p><a href="https://i.sstatic.net/92QygPKN.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/92QygPKN.png" alt="enter image description here" /></a></p>

CC BY-SA 4.0
2024-09-24T03:47:48.760Z
2024-09-24T04:02:35.717Z
2024-09-24T04:02:35.717Z
Herr K.
<p><a href="https://i.sstatic.net/gwlTqRlI.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/gwlTqRlI.png" alt="enter image description here" /></a></p>
<p>I know that the area <span class="math-container">$A$</span> under the MC producing at <span class="math-container">$q$</span> is the total variable cost, but rectangle area <span class="math-container">$B$</span> obtained by <span class="math-container">$AVC*q$</span> is also compelling, why do two different ways lead to two different variable costs?</p>
<p>Personally inclined to area <span class="math-container">$A$</span>, but I have no idea what is wrong with argument area <span class="math-container">$B$</span></p>
<p>please help</p>

<microeconomics><cost>
Which area correctly reveals the variable cost, area under AVC also compelling
LJNG
# Which area correctly reveals the variable cost, area under AVC also compelling

(Asked by: username_0 on 2024-09-23)

[![enter image description here](https://i.sstatic.net/gwlTqRlI.png)](https://i.sstatic.net/gwlTqRlI.png)

I know that the area $A$ under the MC producing at $q$ is the total variable cost, but rectangle area $B$ obtained by $AVC\*q$ is also compelling, why do two different ways lead to two different variable costs?

Personally inclined to area $A$, but I have no idea what is wrong with argument area $B$

please help

**Tags:** microeconomics, cost


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## 1 answers

### Answer by username_1 on 2024-09-24. Score: 4 | Accepted answer

That is because your figure is not drawn to scale. Take the following cost function:

\begin{align}
TC(q) = \underbrace{[(q-4)^3 +64]}\_{VC(q)} + \underbrace{36\vphantom{q}}\_{FC}
\end{align}
where the $+64$ term is to ensure that $VC(0)=0$.

The associated cost curves are [plotted](https://www.desmos.com/calculator/xvxbupg22e) below. By simple eyeballing, the green area under the MC is the same as the area of the purple rectangle. Of course, this can be verified analytically using the above equation.

[![enter image description here](https://i.sstatic.net/92QygPKN.png)](https://i.sstatic.net/92QygPKN.png)


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