Figure 5.1
-Refer to Figure 5.1, which shows a family of average cost curves. The average fixed cost curve is represented by

Question

Quizplus · Accepted Answer

Curve 3 is the average fixed cost curve because it starts at a positive value on the y-axis and continually decreases as output increases. Curve 1 represents the average variable cost, as it starts at zero (since variable costs are zero when output is zero) and increases as output increases. Curve 2 represents the average total cost, as it is the sum of the average fixed cost (curve 3) and the average variable cost (curve 1). The vertical sum of curve 1 and curve 2 is not a valid option, as it would not represent a separate cost curve.

Figure 5.1 -Refer to Figure 5.1, Which Shows a Family of Average