28.Average fixed cost: A. Increases as output increases B. Remains the same whatever the level of output C. Diminishes as output increases D. Diminishes as output diminishes
Question
28.Average fixed cost: A. Increases as output increases B. Remains the same whatever the level of output C. Diminishes as output increases D. Diminishes as output diminishes
Solution
The correct answer is C. Average fixed cost diminishes as output increases.
Here's why:
Fixed costs are costs that do not change with the level of output. Examples include rent, salaries, and equipment costs. These costs are incurred regardless of how much is produced.
Average fixed cost is calculated by dividing total fixed costs by the quantity of output. As the quantity of output increases, the same total fixed cost is spread over more units of output, causing the average fixed cost per unit to go down.
So, as output increases, average fixed cost diminishes.
Similar Questions
As output increases, fixed cost per unit:Group of answer choicesremains constant.increases.equals to fixed costs.decreases.
The average fixed cost curve:Multiple choice question.decreases for all levels of output.increases for low levels of output, then begins to decrease as output increases.increases for all levels of output.decreases for low levels of output, then begins to increase as output increases.
Which statement is correct in relation to fixed costs per unit of output? Correct Answer They decline as the level of output increases You Answered They stay the same irrespective of the level of output They increase as the level of output increases They are semi-variable with the level of output
Explain why average fixed costs fall consistently as output increases.
What type of cost does not change with the level of output in the short run?Average costVariable costFixed costMarginal cost
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.