AFC falls
The difference narrows. ATC is the sum of AVC and AFC.. Since AFC declines steadily as output rises, the difference between ATC and AVC must narrow steadily.
The cost that always declines as output increases is the average fixed cost (AFC). As production increases, the total fixed costs are spread over a larger number of units, resulting in a lower average fixed cost per unit. Unlike variable costs, which may increase with output, fixed costs remain constant regardless of the level of production, leading to a continuous decline in AFC as output rises.
mc=ac
The Average Fixed Cost (AFC) curve is typically downward sloping and approaches the horizontal axis as output increases. This shape arises because fixed costs are spread over a larger quantity of output; as production increases, the average fixed cost per unit decreases. Consequently, the AFC curve never touches the axis, indicating that while AFC diminishes, it never becomes zero.
The equilibrium wage falls and the equilibrium quantity of labor rises
The difference narrows. ATC is the sum of AVC and AFC.. Since AFC declines steadily as output rises, the difference between ATC and AVC must narrow steadily.
The cost that always declines as output increases is the average fixed cost (AFC). As production increases, the total fixed costs are spread over a larger number of units, resulting in a lower average fixed cost per unit. Unlike variable costs, which may increase with output, fixed costs remain constant regardless of the level of production, leading to a continuous decline in AFC as output rises.
As output expands, fixed costs are spread out over a larger quantity of output, causing average fixed cost (AFC) to decrease. Since average total cost (ATC) is the sum of average variable cost (AVC) and AFC, and AFC is decreasing, ATC will also decrease. However, AVC tends to decrease at a slower rate than AFC, so the gap between AVC and ATC narrows as output expands.
AFC, or Average Fixed Cost, is represented as a rectangular hyperbola because it is inversely related to the level of output in the short run. As production increases, the total fixed costs are spread over more units, causing AFC to decrease. This relationship follows the equation AFC = TFC/Q, where TFC is constant and Q (quantity produced) increases, resulting in the characteristic hyperbolic shape. Thus, AFC approaches zero as output becomes very large, illustrating the inverse relationship between fixed costs and output.
mc=ac
The Average Fixed Cost (AFC) curve is typically downward sloping and approaches the horizontal axis as output increases. This shape arises because fixed costs are spread over a larger quantity of output; as production increases, the average fixed cost per unit decreases. Consequently, the AFC curve never touches the axis, indicating that while AFC diminishes, it never becomes zero.
The equilibrium wage falls and the equilibrium quantity of labor rises
AFC, or Average Fixed Cost, is calculated by dividing a firm's total fixed costs by the quantity of output produced. Fixed costs are expenses that do not change with the level of production, such as rent and salaries. As output increases, AFC decreases because the fixed costs are spread over more units, illustrating the concept of economies of scale. This metric helps firms assess cost efficiency and pricing strategies.
Prices rise, output rises
temperature ergo output
economies of scale
Economies of scale.