Exhibit 8-5
-If average fixed cost is falling with increasing output, then
A)marginal cost must be increasing.
B)average total cost must be decreasing.
C)average variable cost must be decreasing.
D)total fixed cost must be constant.
E)marginal cost must be decreasing.

Question

Exhibit 8-5 
-If average fixed cost is falling with increasing output, then
A)marginal cost must be increasing. 
B)average total cost must be decreasing. 
C)average variable cost must be decreasing. 
D)total fixed cost must be constant. 
E)marginal cost must be decreasing.

Quizplus · Accepted Answer

Total fixed cost remains constant regardless of the level of output, which causes the average fixed cost to fall as output increases because the fixed cost is spread over more units.

Exhibit 8-5 -If Average Fixed Cost Is Falling with Increasing Output, Then