Asked by Ashley Ochoa on Jul 16, 2024
Verified
The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves.
Average-Total-Cost Curve
A graphical representation showing how the average total cost of producing a good changes as the quantity produced changes.
Average-Fixed-Cost
The fixed costs of production divided by the quantity of output produced; it decreases as production increases.
Average-Variable-Cost
The total variable cost divided by the quantity of output produced.
- Absorb information regarding the characteristics of cost fluctuations, including variable, fixed, and marginal costs, and their linkage to the quantity of output produced.
Verified Answer
LS
Liang SheenaJul 20, 2024
Final Answer :
True
Explanation :
The average-total-cost curve reflects the shape of both the average-fixed-cost and average-variable-cost curves because it is derived from the sum of these two costs divided by the quantity of output produced. As output increases, average fixed costs decrease, and average variable costs initially decrease and then increase, which influences the U-shape of the average total cost curve.
Learning Objectives
- Absorb information regarding the characteristics of cost fluctuations, including variable, fixed, and marginal costs, and their linkage to the quantity of output produced.