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Question
Choose the correct alternative from given options:
Average fixed cost curve ____________.
Options
is a straight line parallel to X-axis.
is straight line parallel to Y-axis.
falls, as more units are produced
rises, as more units are produced
Solution
Average fixed cost curve falls as more units are produced.
Hence, the correct answer is option falls, as more units are produced.
RELATED QUESTIONS
What is the behaviour of average fixed cost as output is increased? Why is it so?
A firm’s average fixed cost, when it produces 2 units, is Rs 30. Its average total cost schedule is given below. Calculate its marginal cost and average variable cost at each level of output.
|
Output (units) |
1 |
2 |
3 |
|
Average Total Cost (Rs) |
80 |
48 |
40 |
What does the average fixed cost curve look like? Why does it look so?
Complete the following table :
| Output Units |
Marginal Cost Rs |
Average Variable Cost Rs | Total Cost Rs |
Average Fixed Cost Rs |
| 1 | 60 | ...... | 120 | ...... |
| 2 | ...... | ...... | 174 | ...... |
| 3 | ...... | 54 | ...... | ...... |
| 4 | 54 | ...... | ...... | 15 |
| 5 | ...... | 57 | 345 | ...... |
