Which of the following always decreases when output increases?
A) total fixed cost
B) marginal cost
C) average variable cost
D) average fixed cost
E) total cost

Question

Quizplus · Accepted Answer

Average fixed cost (AFC) will always decrease as output increases because fixed costs are spread over a larger quantity of output. The formula for AFC is AFC = TFC/Q, where TFC is Total Fixed Cost and Q is the quantity of output. As Q increases, AFC decreases. None of the other choices always decrease as output increases.

Which of the Following Always Decreases When Output Increases