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It decreases in the long run because of the law of diminishing returns which states that
that as equal quantities of one variable factor are increased, while other factor inputs remain constant, all things remaining equal, a point is reached beyond which the addition of one more unit of the variable factor will result in a diminishing rate of return and the marginal physical product will fall...................hope this helps
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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 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 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
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 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 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,
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
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.
What causes average fixed cost to decline?
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.
How do indivisible inputs affect production cost?
when the production process requires the use of indivisible input, the average cost of production increases as output decreases. This is because the cost of the indivisible input will be be spread over a smaller quantity output. so to gain maximum returns,the output quantity must be regulated such that the quantity of indivisible input will more or less all be used up to manufacture that amount of output. cheers, mishaal
For the average total cost curve of a firm without economies of scale what happens to cost as output increases?
costs go down
As output increases total variable costs?
If the output increases, so will the variable cost. Though, variable cost is not directly proportionate to the output, still it will witness an incline.
What happens when the cost of capital increases?
The market value of a firm's equity increases, the cost of capital decreases.
