Average fixed cost is equal to the:
A) difference between marginal cost and average variable cost.
B) difference between marginal cost and average total cost.
C) difference between average total cost and average variable cost.
D) total fixed cost divided by the minimum efficient scale.
E) total variable cost divided by the minimum efficient scale.

Question

Quizplus · Accepted Answer

Average fixed cost is the fixed cost divided by the quantity of output produced. It represents the portion of the total cost that is attributed to fixed costs and decreases as the quantity of output increases. The formula for average total cost is total cost divided by quantity of output, and it can be decomposed into average fixed cost plus average variable cost. Therefore, the difference between average total cost and average variable cost is equal to average fixed cost.

Average Fixed Cost Is Equal to The