quantity of output produced and the cost of producing that output. We always show the fixed costs as the

vertical intercept of the total cost curve; that is, they are the costs incurred when output is zero so there are no

variable costs.

You can see from the graph that once production starts, total costs and variable costs rise. While variable costs

may initially increase at a decreasing rate, at some point they begin increasing at an increasing rate. This is

caused by diminishing marginal productivity which we discussed earlier in the Production in the Short Run

section of this chapter, which is easiest to see with an example. As the number of barbers increases from zero

to one in the table, output increases from 0 to 16 for a marginal gain (or marginal product) of 16. As the

number rises from one to two barbers, output increases from 16 to 40, a marginal gain of 24. From that point
{"creationdate": "2022-12-07T14:15:44-06:00", "total_pages": 597, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "uploaded_via": "batch_uploader", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "creator": "PDFMiner", "upload_timestamp": "2026-02-07T15:37:44.339247", "producer": "Prince 14.2 (www.princexml.com)", "batch_upload": true, "title": "Principles of Microeconomics 3e", "file_name": "Microeconomics3e.pdf", "file_type": ".pdf", "file_size_mb": 26.99, "moddate": "2022-12-07T14:23:05-06:00"}