The Average Fixed Cost (AFC) curve is ___ as output increases.
Understand the Problem
The question is asking about the behavior of the Average Fixed Cost (AFC) curve in relation to changes in output levels. Specifically, it wants to know how the AFC curve behaves as output increases, which is a concept in economics.
Answer
Downward sloping
The average fixed cost (AFC) curve is downward sloping as output increases.
Answer for screen readers
The average fixed cost (AFC) curve is downward sloping as output increases.
More Information
The AFC curve decreases as output increases because total fixed costs are divided by an increasing quantity of output, thus lowering the average fixed cost per unit.
Tips
A common mistake is confusing AFC with variable costs, which do not behave the same way as fixed costs when output changes.
Sources
- Average Fixed Cost (AFC) Curve - Principles of Microeconomics - library.fiveable.me
- Solved: The Average Fixed Cost (AFC) Curve - Chegg.com - chegg.com
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