Which of the following does NOT describe average fixed cost?
A) It is calculated by dividing fixed costs by output.
B) It declines continuously as output increases.
C) It equals the difference between average total cost and average variable cost.
D) It is always less than average variable cost.

Question

Quizplus · Accepted Answer

Option D is incorrect as there is no guarantee that average fixed cost is going to be less than average variable cost. It might be equal to or greater than average variable cost.

Which of the Following Does NOT Describe Average Fixed Cost