Clear verbal reasoning is essential to a good grade For part

Clear verbal reasoning is essential to a good grade. For part 2, break down any numbers you provide in the report and make sure the chain of reasoning is clear. You can not include equations and explain them verbally instead, include calculations as an appendix or as footnotes, or integrate them into the report. If you want to include graphs (they\'re not required), Fooplot.com allows you to download plots in .png format. Feel free to assign names to the facility, manager, cost-saving machine etc. in part 2. You\'re encouraged to work on calculations and interpretations together, but the write-up must be in your own words. These lines represent fixed costs, variable costs, total costs, revenue, and profit. Identify which line is which and explain your reasoning.

Solution

5 - Fixed costs

4 - Variable costs

2 - Total costs

5 represents a constant line which clearly represents the Fixed costs.

Variable costs are denoted by a line which increases with x and is 0 at origin so 1 and 4 are its possible candidates. But the Total costs is sum of Fixed costs and Variable costs and Total costs will always be parallel to Variable costs. Variable costs can never be greater than Total Costs. This relationship is fulfilled only when 4 represents Variable costs and 2 represents Total Costs.

1 and 3 are remaining and they represent Revenue and Profit. Since Profit is Revenue - Total Costs and Total Costs is always positive, therefore, Profit is always less than Revenue.

Thus 1 represents revenue.

3 represents Profit.