If the Total Variable Cost (TVC) curve is rising then: A. The Average Fixed Cost (AFC) curve...

If the Total Variable Cost (TVC) curve is rising then:

		A. The Average Fixed Cost (AFC) curve must be falling.
		B. The Average Variable Cost (AVC) curve must be rising.
		C. The Average Total Cost (ATC) curve must be rising.
		D. The Average Variable Cost (AVC) curve must be falling.
		E. The Marginal Cost (MC) curve must be rising.

Solutions

Expert Solution

A. The Average Fixed Cost (AFC) must be falling

TVC is always increasing with increasing level of output. AVC, ATC and MC first decline, reaches a minimum and then starts to increase. With rising TVC, Total Fixed Cost (TFC) is constant. So, as TVC is rising then with constant TFC and increasing output, AFC must be falling as AFC = TFC/output.

Rahul Sunny answered 2 years ago

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