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Question
What is the relation between Average Variable Cost and Average Total Cost, if Total Fixed Cost is zero?
Solution
We know that
TC = TFC + TVC
Dividing both the side by'Q',we get
`(TC)/Q=(TFC)/Q+(TVC)/Q`
ATC = 0 AVC, here TFC = 0
Therefore, ATC = AVC
These cost curves will intersect each other.
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