0
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 else can I help you with?
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 what happens to average physical product?
As output increases, average physical product initially increases due to specialization and efficient resource allocation. However, it eventually starts to decline due to diminishing returns, whereby each additional unit of input produces smaller increases in output.
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 deduced 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 deduce 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.
Which factor increases as the efficiency of a machine increases?
The output work done by the machine increases as the efficiency of the machine increases. This is because efficiency is the ratio of useful work output to the total work input, so as efficiency increases, more of the input work is converted into useful output work.
Is the AVC increases as the level of output increases in the short-run?
Yes, in the short run, as output increases, average variable cost (AVC) tends to decrease at first due to economies of scale, but eventually increases due to diminishing returns to variable factors of production.
