The vertical distance between a firm's ATC and AVC curves represents

A) AFC, which increases as output increases.
B) AFC, which decreases as output increases.
C) marginal costs, which decrease as output decreases.
D) marginal costs, which increase as output increases.

AVC

Average Variable Cost, which is the total variable costs divided by the quantity of output produced.

ATC

A restated definition for Average Total Cost; it implies the cost per unit produced when both fixed and variable costs are accounted for across all levels of output.

AFC

Average Fixed Cost, which is the fixed costs of production spread out over the number of units produced, declining as production increases.