Which of the following is not true of fixed costs?
A)Average fixed costs diminish as output increases.
B)Fixed costs increase AVC.
C)Fixed costs are the difference between SAC and AVC.
D)Fixed costs have no effect on marginal cost.

Question

Quizplus · Accepted Answer

Fixed costs do not directly increase Average Variable Costs (AVC) because AVC is calculated based on variable costs alone, not including fixed costs. Fixed costs are constant regardless of the level of output, whereas AVC changes with the level of output.

Which of the Following Is Not True of Fixed Costs