Explain the reason behind the declining gap between average cost (AC) and average variable cost (AVC) curves at higher levels of output
The gap between the AC and the AVC is the average fixed cost of production, which is obtained by dividing the total fixed cost by the level of output. As output level rises, average fixed cost of production declines. Hence, the gap between the AC and the AVC also declines as output expands.
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While making a purchase decision using marginal thinking, a buyer should buy the good that yields the:
A) highest marginal benefit per dollar spent. B) lowest marginal benefit per dollar spent. C) highest average benefit plus marginal benefit per dollar spent. D) lowest average benefit plus marginal benefit per dollar spent.
If an issuer has the right to pay off a bond before its maturity, the bond is
A) convertible. B) speculative. C) callable. D) reversible.