Question

Which of the followings is true about the average fixed cost? The average fixed cost decreases...

Which of the followings is true about the average fixed cost?

The average fixed cost decreases with the quantity of output produced.

The average fixed cost increases with the quantity of output produced.

The average fixed cost is the same regardless of the quantity of output produced.

The average fixed cost may increase or decrease with the quantity of output produced.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

It shall be noted that the total fixed cost is the cost incurred by the firm even when the production level is zero.

So, as the production takes place, this fixed cost is spread over the output produced.

The average fixed cost is the total fixed cost per unit of output.

Thus, as output increases, the average fixed cost decreases because the same amount of total fixed costs is being spread over a larger number of units of output.

Hence, the correct answer is - The average fixed cost decreases with the quantity of output produced.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Average variable cost A. decreases when its value is greater than marginal cost, and increases when...
Average variable cost A. decreases when its value is greater than marginal cost, and increases when its value is less than marginal cost. B. decreases when its value is less than marginal cost, and increases when its value is greater than marginal cost. C. is perpetually increasing, sometimes initially at increasing rates but eventually at decreasing ones. D. perpetually decreases. Average fixed costs A. are perpetually decreasing as output increases, but at a decreasing rate. B. are perpetually decreasing as...
multiple answers Which of the followings are true about glycogen regulation? A. The phosphorylated form of...
multiple answers Which of the followings are true about glycogen regulation? A. The phosphorylated form of glycogen phosphorylase is active B. The phosphorylated form of glycogen synthase is active C. Insulin increases the phosphorylated form of glycogen phosphorylase D. Epinephrine increase the phosphorylated form of glycogen phosphorylase in muscles
As a firm increases the level of output that it produces, short-run average fixed cost rises...
As a firm increases the level of output that it produces, short-run average fixed cost rises and then falls. remains constant since fixed costs are constant. decreases. decreases up to a particular level of output and then increases. Flag this Question Question 22 pts Suppose that a firm is currently producing 500 units of output. At this level of output, TVC = $1,000 and TFC = $2,500. What is the firms ATC? $2 $5 $7 $10 Flag this Question Question...
Which of the following is true about the marginal revenue of a firm in a perfectly...
Which of the following is true about the marginal revenue of a firm in a perfectly competitive industry? It is constant. It increases as output sold increases. It decreases as output sold increases. It increases at first, then decreases. It decreases at first, then increases.
1.7 The vertical distance between the total cost and the total variable cost curves: a) Decreases...
1.7 The vertical distance between the total cost and the total variable cost curves: a) Decreases as output increases. b) Increases as output increases. c) Is equal to average fixed cost. d) Is equal to total fixed cost. 1.8 Which one of the following is NOT true of a monopolist? a) A monopolist is protected from competition. b) A monopolist can earn economic profits. c) A monopolist is a price maker. d) A monopolist can sell as much as he/she...
- Which of the following statements is false? a) The difference between average total cost and...
- Which of the following statements is false? a) The difference between average total cost and average fixed cost is average variable cost. b) The marginal cost curve intersects the average variable cost curve and the average total cost curve at their minimum points. c) Firms often refer to the process of lowering average fixed cost as "spreading the overhead." d) When marginal cost equals average total cost, average total cost is at its highest value. - Average total cost...
33. Which of these statements about variable costs is incorrect? a) Variable costs increase as output...
33. Which of these statements about variable costs is incorrect? a) Variable costs increase as output increases. b) Variable costs are equal to total costs minus fixed costs. c) Variable costs occur even when there is no output. d) Variable costs are associated with variable inputs. 34. Suppose a firm has the following expenditures per day: $240 for wages, $150 for materials, and $80 for equipment rental. The owner of the firm owns the building in which it operates. If...
Which of the following statements regarding variable cost is true? Multiple Choice Variable cost remains constant...
Which of the following statements regarding variable cost is true? Multiple Choice Variable cost remains constant on a per unit basis as the number of units produced increases. Variable cost remains the same in total as production increases. Variable cost decreases on a per unit basis as the number of units produced increases. Variable cost increases on a per unit basis as the number of units produced increases.
9. Average cost in the long-run is defined as _____. TVC/Q TC/Q TVC + TFC/Q none...
9. Average cost in the long-run is defined as _____. TVC/Q TC/Q TVC + TFC/Q none of the above 10. Economies of scale is a characteristic of production where ______. average costs increase as output increases total cost decreases as output increases average cost decreases as output increases average cost decreases as output decreases 11. Which of the following factors of production is more likely to be fixed in the short run? The number of workers. Changes in electricity consumed....
As the level of activity decreases: a) fixed cost per unit decreases. b) variable cost per...
As the level of activity decreases: a) fixed cost per unit decreases. b) variable cost per unit decreases. c) variable cost per unit increases. d) fixed cost remains constant in total.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT