The correct answer is: Average fixed cost declines so long as output increases.

Here's why:

Average Fixed Cost (AFC) is calculated by dividing the total fixed costs of production by the quantity of output produced. Fixed costs are costs that do not change with the level of output. Examples include rent, salaries, and insurance.

As output increases, the same amount of fixed costs is spread over a larger number of units of output, causing the AFC to decline. This is known as spreading overhead.

The other options are incorrect because:

1. Average fixed cost is not found by adding average variable cost and average total cost. In fact, Average Total Cost (ATC) is calculated by adding Average Variable Cost (AVC) and AFC.

2. Marginal cost intersects with average total cost and average variable cost at their minimum points, not AFC.

3. AFC does not graph as a U-shaped curve. Instead, it starts high and declines as output increases, forming a downward-sloping curve.

Question

The correct answer is: Average fixed cost declines so long as output increases.

Here's why:

Average Fixed Cost (AFC) is calculated by dividing the total fixed costs of production by the quantity of output produced. Fixed costs are costs that do not change with the level of output. Examples include rent, salaries, and insurance.

As output increases, the same amount of fixed costs is spread over a larger number of units of output, causing the AFC to decline. This is known as spreading overhead.

The other options are incorrect because:

1. Average fixed cost is not found by adding average variable cost and average total cost. In fact, Average Total Cost (ATC) is calculated by adding Average Variable Cost (AVC) and AFC.

2. Marginal cost intersects with average total cost and average variable cost at their minimum points, not AFC.

3. AFC does not graph as a U-shaped curve. Instead, it starts high and declines as output increases, forming a downward-sloping curve.

Knowee AI · Accepted Answer

The correct answer is: Average fixed cost declines so long as output increases.

Here's why:

Average Fixed Cost (AFC) is calculated by dividing the total fixed costs of production by the quantity of output produced. Fixed costs are costs that do not change with the level of output. Examples include rent, salaries, and insurance.

As output increases, the same amount of fixed costs is spread over a larger number of units of output, causing the AFC to decline. This is known as spreading overhead.

The other options are incorrect because:

1. Average fixed cost is not found by adding average variable cost and average total cost. In fact, Average Total Cost (ATC) is calculated by adding Average Variable Cost (AVC) and AFC.

2. Marginal cost intersects with average total cost and average variable cost at their minimum points, not AFC.

3. AFC does not graph as a U-shaped curve. Instead, it starts high and declines as output increases, forming a downward-sloping curve.

Average fixed cost:Group of answer choicesmay be found for any output by adding average variable cost and average total cost.declines so long as output increases.is intersected by marginal cost at its minimum point.graphs as a U-shaped curve.

Question

Solution

Similar Questions

Upgrade your grade with Knowee