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BUDGET CONSTRAINT: The alternative combinations of two different goods that can be purchased with a given income and given prices of the two goods. This budget constraint, also termed budget line, plays a major role in the analysis of consumer demand using indifference curve analysis. Indifference curves represents the "willingness" aspect of consumer demand, the budget constraint captures the "ability". One key consumer demand topic is to analyze how consumer equilibrium is affected by changes in the price of one good. Then end result of this analysis is a demand curve. For more fascinating uses of the budget constraint and indifference curves, and consumer demand analysis, see income-consumption curve and price-consumption curve.

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TOTAL FIXED COST CURVE:

A curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between total fixed cost and the level of output, holding other variables, like technology and resource prices, constant. Because total fixed cost are, in fact, fixed, the total fixed cost curve is, in fact, a horizontal line. The total fixed cost curve is one of three total cost curves, the other two are total cost curve and total variable cost curve.
Total Fixed Cost Curve
Total Fixed Cost Curve
The total fixed cost curve is the most straightforward of the three total curves (the other two being total cost curve and total variable cost curve). The reason for such straightforwardness is that total fixed cost is fixed. It is the same at all output levels.

The total fixed cost curve can be derived in two ways. One is to plot a schedule of numbers relating output quantity and total fixed cost. The other is to vertically subtract the total variable cost curve from the total cost curve. The total fixed cost curve can be used to derive average fixed cost.

Total fixed cost is visually illustrated by the graph to the right, which is the total fixed cost curve for the short-run production of Wacky Willy Stuffed Amigos (those cute and cuddly armadillos and tarantulas). The quantity of Stuffed Amigos production, measured on the horizontal axis, ranges from 0 to 10 and the total fixed cost incurred in the production of Stuffed Amigos, measured on the vertical axis, is $3 at each quantity of production.

Because total fixed cost is fixed, the total fixed cost curve is a horizontal line that intersects the vertical axis at $3. If production is 0 Stuffed Amigos, total fixed cost is $3. If Stuffed Amigo production is 10, total fixed cost is $3. If production of Stuffed Amigos is boosted to a billion, then total fixed cost is $3.

<= TOTAL FIXED COSTTOTAL-MARGINAL RELATION =>


Recommended Citation:

TOTAL FIXED COST CURVE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2021. [Accessed: March 3, 2021].


Check Out These Related Terms...

     | fixed cost | total fixed cost | average fixed cost | average fixed cost curve | total cost | total cost curve | variable cost | total variable cost | total variable cost curve | average cost | average fixed cost | average fixed cost curve | marginal cost |


Or For A Little Background...

     | opportunity cost | fixed input | production inputs | production | production cost | business | factors of production | microeconomics | short-run production analysis | law of diminishing marginal returns | marginal returns | marginal analysis |


And For Further Study...

     | total cost curves | average total cost curve | average variable cost curve | total cost and marginal cost | total variable cost and total product | legal business organizations | firm objectives | opportunity cost, production possibilities | profit | normal profit | profit maximization |


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