Asked by Elorah Stoner on May 18, 2024
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In the short run,and with nonzero fixed costs,the average total cost curve always lies above the average variable cost curve.
Average Total Cost Curve
A graph that shows the average total cost of producing different quantities of output, typically U-shaped, reflecting economies and diseconomies of scale.
Average Variable Cost Curve
The Average Variable Cost Curve graphically represents how a firm's variable costs (costs that change with the level of output) per unit of output change as the firm alters its level of production.
Fixed Costs
Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.
- Acquire knowledge about the relationship existing between the average total cost curve, average variable cost curve, and fixed costs.
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Learning Objectives
- Acquire knowledge about the relationship existing between the average total cost curve, average variable cost curve, and fixed costs.
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