As production increases and the fixed cost is divided by larger quantities of output,average fixed cost drops.This is referred to as the _____ effect.
A)diminishing returns
B)spreading
C)constant cost
D)increasing returns

Question

Quizplus · Accepted Answer

Spreading effect refers to the decrease in average fixed cost as production quantity increases and fixed cost is spread across more units of output.

As Production Increases and the Fixed Cost Is Divided by Larger