Question

In: Economics

the average total cost curve and the average variable cost curve get A.closer and closer as...

the average total cost curve and the average variable cost curve get

A.closer and closer as output​ increases, because the

average total cost

curve is

declining.

B.farther and farther apart as output​ increases, because the average variable cost curve is

rising.

C.

closer and closer as output​ increases, because the average fixed cost curve is declining.

D.farther and farther apart as output​ increases, because the

average total cost

curve is

rising.

E.closer and closer as output​ increases, because the average variable cost curve is

rising.

Solutions

Expert Solution

Ans.- (C)

We know,

ATC = AFC + AVC

And AFC = TFC/Q

Since TFC is constant so AFC will continue to decrease with an increase in output.

If AFC continues to decrease then difference between ATC and AVC will also fall ( remember that ATC= AFC+AVC) and therefore they come closer and closer.

Rahul Sunny answered 2 years ago
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