Figure 7-5

Which of the curves in Figure 7-5 could be a firm's average fixed cost curve?
A)(a)
B)(b)
C)(c)
D)(d)

Question

Figure 7-5

Which of the curves in Figure 7-5 could be a firm's average fixed cost curve?
A)(a) 
B)(b) 
C)(c) 
D)(d)

Quizplus · Accepted Answer

The curve that represents average fixed cost should decrease continuously as output increases, since fixed costs are spread over a larger quantity of output. Only curve (a) fits this description. The other curves either increase or remain constant as output increases, which is inconsistent with the definition of average fixed cost.

Figure 7-5 Which of the Curves in Figure 7-5 Could Be a 7-5