Average total cost minus average variable cost ________ as output increases because ________ as output increases.
A) decreases and then increases; marginal cost initially decreases and then increases
B) decreases; average fixed cost decreases
C) decreases; marginal returns diminish
D) decreases; economies of scale are present

Question

Quizplus · Accepted Answer

Average total cost minus average variable cost equals average fixed cost, which decreases as output increases because fixed costs are spread over more units.

Average Total Cost Minus Average Variable Cost ________ as Output