Average costs curves initially fall
A)Due to declining average fixed costs
B)Due to rising average fixed costs
C)Due to declining marginal costs
D)Due to rising marginal costs

Question

Quizplus · Accepted Answer

Initially, the average costs curves fall due to declining average fixed costs. As the level of output increases, fixed costs are spread over a greater number of units, resulting in a lower average fixed cost. This brings down the average cost curve until it reaches the lowest point before rising again due to increasing marginal costs.

Average Costs Curves Initially Fall