As output increases, average fixed costs
A)increase.
B)decrease.
C)remain constant.
D)first increase and then decrease.

Question

Quizplus · Accepted Answer

As output increases, the total fixed costs are spread over more units of output, which results in a decrease in average fixed costs per unit. Fixed costs do not change with the level of output, so as output goes up, the cost allocated to each unit of output goes down.

As Output Increases, Average Fixed Costs