Which of the following statements is true of the relationship among the average cost functions?
A)ATC = AFC - AVC
B)AVC = AFC + ATC
C)AFC = ATC + AVC
D)AFC = ATC - AVC

Question

Quizplus · Accepted Answer

The relationship among the average cost functions can be expressed as:
ATC = AFC + AVC
or
ATC = (AFC x Q) + (AVC x Q)/Q
which simplifies to:
ATC = AFC + AVC
or
ATC - AVC = AFC
Therefore, option D is the correct statement as it shows the relationship between AFC and ATC in terms of AVC.

Which of the Following Statements Is True of the Relationship