The higher the level of FC:
A)the lower the level of output which minimizes SMC.
B)the lower the profit, ceteris paribus.
C)the higher the level of output at which AFC reaches a minimum.
D)the more likely a firm will substitute variables for fixed factors.

Question

Quizplus · Accepted Answer

Higher fixed costs reduce profit, assuming all other factors remain constant (ceteris paribus), because they increase total costs without affecting revenue.

The Higher the Level of FC