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When production increases over the short run: a) Average Fixed cost will remain the same. b)...

Question:

When production increases over the short run:

a) Average Fixed cost will remain the same.

b) Average Variable cost will increase faster than Average Total cost.

c) Average Variable Cost will eventually increase faster than Marginal cost.

d) Marginal Cost will intercept Total Variable cost in its minimum point.

e) b and d are correct.

Average Fixed Cost:

Average fixed cost is the total fixed cost divided by the number of units produced. Since fixed cost is constant with respect to the volume of production, average fixed cost tends to fall as production increases.

Answer and Explanation: 1

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The answer is b).

Average total cost is the sum of average fixed cost and average variable cost. Average fixed cost falls with the volume of...

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Marginal Cost: Definition, Equation & Formula

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Chapter 3 / Lesson 12
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What is marginal cost? Learn how to calculate marginal cost with the marginal cost formula. See the definition, behavior, and marginal cost examples.


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