Area of Fixed Cost for Perfectly Competitive Firm

   To the right we show the same fixed cost using the same cost curves, but using a different level of output.

   The area we showed before, Q* x (ATC - AVC) and the area to the right Q2 x (ATC - AVC) are equal (if everything is drawn correctly). This is because fixed cost are costs that don't vary with output, hence the term "fixed". At Q2 the distance between ATC and AVC is greater than at Q*. Even though the areas look somewhat different, they have the same value.