The average-fixed-cost curve is always declining. How does this affect the relationship between the AVC and ATC curves?
ATC = AVC + AFC, so the vertical distance between the AVC and ATC curves is the value of AFC for that level of output. Both AVC and ATC are typically U-shaped. The vertical distance between the two curves is steadily declining as output increases because AFC is steadily declining. Said another way, the two curves move closer together as output increases.
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