As a ﬁrm increases its output in the short run, the vertical distance between average total cost and average variable cost will decrease.

Question

Quizplus · Accepted Answer

As a firm increases its output in the short run, the fixed costs remain constant and get spread over a larger amount of output, resulting in a decrease in the vertical distance between average total cost and average variable cost.

As a ﬁRm Increases Its Output in the Short Run