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The average fixed cost curve is negatively sloped. Average fixed cost is relatively high at small quantities of output, then declines as production increases. The more production increases, the more average fixed cost declines. The reason behind this perpetual decline is that a given FIXED cost is spread over an increasingly larger quantity of output.
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Relationship between marginal cost and average total cost?
The cost curves best tells us the relationship between the marginal cost and average total cost. The average fixed cost (AFC) curve will decline as additional units are produced, and continue to decline.
What happens to the value of average fixed cost as the level of output increases?
The average fixed cost is equal to fixed cost divided by level of output, if the output increases; the average fixed cost is less.
What is the formula to find the average variable cost?
Average Variable Cost = Total Variable Cost/ Quantity Average Cost = Average Fixed Cost + Average Variable Cost Average Cost = Total Cost/Quantity
A company is producing 500 units of output Its average variable costs are 2.00 and its average fixed costs are 50 What is the total cost?
Total cost = variable cost + fixed cost fixed cost = 50 fixed cost per unit = 50 / 500 = .1 total cost = 2 + .1 = 2.1 per unit
What is the relationship between Average variable cost Average fixed cost and marginal cost?
we can subtract the AVC and we will get the MC
Relationship between marginal cost and average total cost?
The cost curves best tells us the relationship between the marginal cost and average total cost. The average fixed cost (AFC) curve will decline as additional units are produced, and continue to decline.
What happens to the value of average fixed cost as the level of output increases?
The average fixed cost is equal to fixed cost divided by level of output, if the output increases; the average fixed cost is less.
What is the formula to find the average variable cost?
Average Variable Cost = Total Variable Cost/ Quantity Average Cost = Average Fixed Cost + Average Variable Cost Average Cost = Total Cost/Quantity
A company is producing 500 units of output Its average variable costs are 2.00 and its average fixed costs are 50 What is the total cost?
Total cost = variable cost + fixed cost fixed cost = 50 fixed cost per unit = 50 / 500 = .1 total cost = 2 + .1 = 2.1 per unit
What is the relationship between Average variable cost Average fixed cost and marginal cost?
we can subtract the AVC and we will get the MC
What is cost What is the difference between total cost and average cost?
Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.
The average fixed cost curve is constant?
Yes.
What does AFC stand for in economics?
average fixed cost
Increase any of the fixed cost what happens to the numbers of units in the break even?
Increased in fixed cost causes the breakeven point to increase as well because now more units requires to fill the fixed cost.
DO Average cost always falls as output increases because fixed costs will be spread more thinly?
Not necessarily. Total Cost = Fixed Cost + Variable Cost; Variable Cost=f(Quantity) and if f`(Quantity)>0 it implies that as quantity produced rises variable cost would rise. Average Total Cost=Average Fixed Cost + Average Variable Cost. If initially the Total Cost function is more of an odd function (mostly it is) then the Average Cost will look more like a parabola i.e. it will tend to fall becuase the Fixed Cost gets thin but later that is overtaken by the increase in Variable Cost. But there are cases when Average Total Cost does fall continuously as quantity increases and these involve huge Fixed Costs like say Electric Supply Infrastructure. This is called natural monopoly.
What effect will an increase in output have on average fixed average variable and average total cost?
average fixed will go down, average variable will remain the same, and average total will go down.
Average total cost is very high when a small amount of output is produced because?
average fixed cost is high
