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DO Average cost always falls as output increases because fixed costs will be spread more thinly?
Wiki User
∙ 10y ago
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.
Wiki User
∙ 10y ago
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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.
When marginal costs are below average cost at a given output one can deduce that if output increases what happens?
when marginal costs are below average cost at a given output, one candeduce that, if output increases dose average costs fall or marginal costs will fall
As output increases the average fixed costs?
remain constant
When a manufacturer increases output what cost will decrease?
average total cost
When marginal costs are below average cost at a given output one can deduce that if output increases?
when marginal cost are below average cost at a given output, one can deduce that,
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.
When marginal costs are below average cost at a given output one can deduce that if output increases what happens?
when marginal costs are below average cost at a given output, one candeduce that, if output increases dose average costs fall or marginal costs will fall
As output increases the average fixed costs?
remain constant
What is a sentence using the word output?
The output of the average American factory increases as new equipment is introduced.
When a manufacturer increases output what cost will decrease?
average total cost
When marginal costs are below average cost at a given output one can deduce that if output increases?
when marginal cost are below average cost at a given output, one can deduce that,
When marginal costs are below average cost at a given output one can deduced that if output increases?
when marginal cost are below average cost at a given output, one can deduce that,
If average profit increases with output marginal profit must be?
greater than average profit.
Why is an Average Fixed Cost curve downward sloping?
This is a simple enough question to answer, Fixed cost is defined as the cost invariant of output, i.e. cost that doesnot change as output increases, i.e. constant. So if you divide a constant by output as a variable, as output increases Average Fixed Costs drop.
What happen if marginal cost is less than Average cost?
Average cost declines and output increases.
If the resistance of a load increases will the current increase or decrease?
it increases because increasing load means more output power, more output power means more current
What is Substitution bias?
The bias that arises when the index number formula used for an output PPI systematically understates average price increases because it does not take into account that producers seeking to maximize revenue from a given technology and inputs may shift production to items with above average relative price increases. Or, the bias that arises when the index number formula used for an input PPI systematically overstate average price increases because it does not take into account that producers seeking to minimize costs with a given technology and output may shift purchases of inputs to items with below average relative price increases. Reference: http://stats.oecd.org/glossary/detail.asp?ID=5698
