The larger the output, the greater the quantity of output over which fixed cost is spread.Called the ________ effect, this leads to a _.
A)spreading; lower average fixed cost.
B)spreading; higher average fixed cost.
C)diminishing returns; lower average variable cost.
D)diminishing returns; higher average variable cost.

Question

Quizplus · Accepted Answer

The spreading effect leads to a lower average fixed cost as the fixed costs are spread over a greater quantity of output.

The Larger the Output, the Greater the Quantity of Output