The vertical distance between a firm's average total cost curve, ATC, and its average variable cost curve, AVC
A) decreases as output increases.
B) is equal to its marginal cost, MC.
C) is equal to its total fixed cost, TFC.
D) is equal to its average product.

Question

Quizplus · Accepted Answer

As output increases, the average fixed cost (AFC) decreases, which reduces the vertical distance between the ATC and AVC curves, since ATC = AVC + AFC.

The Vertical Distance Between a Firm's Average Total Cost Curve