The average fixed cost (AFC)curve
A)Is U-shaped as a result of diminishing returns.
B)Declines as long as output increases.
C)Is intersected at its minimum point by marginal cost.
D)Intersects the marginal cost curve at its minimum point.

Question

Quizplus · Accepted Answer

The average fixed cost (AFC) curve is a declining curve as long as output increases. This is due to the fact that fixed costs (the costs that don't vary with the level of output) get spread out over more units of output, resulting in a lower average fixed cost. The AFC curve doesn't intersect with the marginal cost (MC) curve because MC only takes into account the cost of producing one additional unit of output, while AFC is the total fixed cost divided by the level of output.

The Average Fixed Cost (AFC)curve