At 10 units of output, the vertical distance between a firm's average total cost and average variable cost curves will be:
A) smaller than it is at 100 units of output.
B) the same as it is at 100 units of output.
C) larger than it is at 100 units of output.
D) impossible to state from the information given.

Question

Quizplus · Accepted Answer

The vertical distance between average total cost (ATC) and average variable cost (AVC) is the average fixed cost (AFC). As output increases, AFC decreases because fixed costs are spread over more units, making the distance smaller at higher output levels.

At 10 Units of Output, the Vertical Distance Between a Firm's