Answer
The Law of Diminishing Marginal Returns (LDMR)'s influence on the total variable cost curve can be seen in its three stages. In the initial stage, the curve is sloping upward with a decreasing gradient. This implies that the addition of each additional unit of input adds more to total output of the previous unit, thus the additional variable cost of each unit would decrease as compared to the previous unit. The second stage of LDMR occurs after the inflexion point, where the curve is sloping upwards with an increasing gradient. This implies that each additional unit of input adds less to total output than the previous unit, thus the additional variable cost of each unit would increase as compared to the previous unit.
Work Step by Step
Total fixed cost remains the same regardless the quantity, thus fixed cost would remain at 60 dollars.
Total cost is the addition of total fixed cost and total variable cost, and the difference between the total fixed cost and the total variable cost is the total fixed cost.
