Asked by aurelia digby on May 28, 2024
Verified
As output decreases, average fixed costs
A) decrease.
B) initially decrease and then increase.
C) remain constant.
D) increase.
Output Decreases
A reduction in the amount of goods or services produced by a company or economy over a specific period.
Average Fixed Costs
The total fixed costs of production divided by the number of units produced, showing how fixed costs per unit change with production levels.
- Recognize the contrast between fixed costs and variable costs, along with their respective behaviors in the production process.
Verified Answer
JL
Jennifer LodewykMay 29, 2024
Final Answer :
D
Explanation :
Average fixed costs increase as output decreases because the total fixed costs are spread over a smaller number of units, making the cost per unit higher.
Learning Objectives
- Recognize the contrast between fixed costs and variable costs, along with their respective behaviors in the production process.
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