-In the above figure, as output increases, the distance between curves B and C decreases because
A) there are increasing marginal costs as output increases.
B) average fixed cost decreases as output increases.
C) total cost decreases as output increases.
D) there are diminishing returns to average total cost.

Question

-In the above figure, as output increases, the distance between curves B and C decreases because
A) there are increasing marginal costs as output increases. 
B) average fixed cost decreases as output increases. 
C) total cost decreases as output increases. 
D) there are diminishing returns to average total cost.

Quizplus · Accepted Answer

The distance between curves B and C decreases as output increases because curve B represents average total cost, and curve C represents average variable cost. The difference between these two curves is the average fixed cost, which decreases as output increases because fixed costs are spread over a larger number of units.

-In the Above Figure, as Output Increases, the Distance Between