Average fixed cost (AFC)
A)is the fixed cost divided by the average sales price of the final good.
B)is the fixed cost divided by the quantity of output produced.
C)is $0 when no output is produced.
D)is always less than average variable cost (AVC).

Question

Quizplus · Accepted Answer

AFC is the fixed cost divided by the quantity of output produced. Option A is incorrect as it uses the average sales price of the final good, which is not relevant to AFC. Option C is also incorrect as fixed cost remains the same regardless of whether any output is produced or not. Option D is not necessarily true as the relationship between AFC and AVC depends on the level of output produced.

Average Fixed Cost (AFC)