Question

Average fixed cost A. increases as output rises. B. remains constant as output rises. C. equals marginal cost for the first unit of output. D. decreases as output rises.

Answer 1

Answer:

D

Explanation:

Average fixed cost = total fixed cost / output

Fixed cost is cost that does not vary with output.

for example electricity tariff

for example, total fixed cost is $10,000. what is average fixed cost when output is 500 and 1000

$10,000 / 500 = $20

$10,000 / 1000 = $10

We can see that average fixed cost decreased as output increased