The gap between the ATC and AVC curve will

Question

Quizplus · Accepted Answer

The difference between ATC (average total cost) and AVC (average variable cost) will shrink to nearly zero because as output increases, fixed costs are spread over more units of output, decreasing the average fixed cost component of ATC. This causes ATC to slope downwards while AVC slopes upwards due to the increasing marginal cost of producing each additional unit of output. Eventually, as output increases, the difference between the two curves (ATC-AVC) will approach zero.

The Gap Between the ATC and AVC Curve Will