As the level of output increases, what happens to the value of average fixed cost, and what happens to the difference between the value of average total cost and average variable cost?
What will be an ideal response?
As the level of output increases, the value of average fixed cost decreases. The same fixed cost is divided by a larger and larger output. The difference between average total cost and average variable cost is average fixed cost, so as is stated above, the value decreases.
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Mac can bake more cookies than Monica per hour. It must be true that
A) Monica has an absolute advantage in cookie baking. B) Mac has an absolute advantage in baking cookies. C) Mac has a comparative advantage in baking cookies. D) Monica has a comparative advantage in baking cookies. E) Mac cannot benefit by trade between the two of them.
If the price elasticity of demand for a product equals 1, as its price rises the
A) quantity demanded increases. B) total revenue increases. C) quantity demanded does not change. D) total revenue does not change.