As output increases,average total cost decreases
A) constantly.
B) as the average product of labor decreases.
C) initially and then starts to increase.
D) in the long run and the short run.
E) as long as average fixed cost decreases.

Question

Quizplus · Accepted Answer

Initially, when output increases, the fixed cost gets spread over a larger output, resulting in a decrease in average total cost. However, after a certain level of output, the marginal cost of production starts increasing, resulting in an increase in the average total cost. Therefore, initially, the average total cost decreases but after a certain point, it starts increasing.

As Output Increases,average Total Cost Decreases