The vertical distance between a firm's ATC and AVC curves represents
A)AFC, which increases as output increases.
B)AFC, which decreases as output increases.
C)marginal costs, which decrease as output decreases.
D)marginal costs, which increase as output increases.

Question

Quizplus · Accepted Answer

The vertical distance between a firm's Average Total Cost (ATC) and Average Variable Cost (AVC) curves represents the Average Fixed Cost (AFC), which decreases as output increases because fixed costs are spread over a larger number of units.

The Vertical Distance Between a Firm's ATC and AVC Curves