Refer to the above diagram.The vertical distance between ATC and AVC reflects:

Question

Quizplus · Accepted Answer

The vertical distance between ATC and AVC reflects the average fixed cost (AFC) at each level of output. This is because AFC is the difference between ATC and AVC. The presence of economies of scale would be reflected by changes in the ATC curve itself, not in the distance between the ATC and AVC curves. The law of diminishing returns and marginal cost would be reflected by changes in the shape of the AVC curve, not in the distance between the two curves.

Refer to the Above Diagram