Question

Average fixed cost rev: 06_26_2018 Multiple Choice equals marginal cost when average total cost is at its minimum. may be found by adding average variable cost and average total cost. graphs as a U-shaped curve. declines continually as output increases.

Answer 1

Answer: declines continually as output increases.

Step-by-step explanation:

The Fixed costs are are constant and do not change throughout the production process. This means that on Average, they will keep dropping as more output is produced.

The formula for Average Fixed Costs;

Average Fixed Costs = Fixed Costs/ Output

From the formula you will see that as output increases, the Average Fixed Cost reduces because the Fixed Costs will remain the same while being divided by a larger number each time output increases.