Figure 7.4
-Refer to Figure 7.4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?
A)It remains constant.
B)It rises.
C)It falls.
D)It could rise or fall depending on what happens to total cost.

Question

Figure 7.4 
-Refer to Figure 7.4.What happens to the average fixed cost of production when the firm increases output from 150 to 200?
A)It remains constant. 
B)It rises. 
C)It falls. 
D)It could rise or fall depending on what happens to total cost.

Quizplus · Accepted Answer

Average fixed cost decreases as output increases because the total fixed cost is spread over a larger number of units.

Figure 7.4 -Refer to Figure 7.4.What Happens to the Average Fixed Cost