At any given volume, average fixed costs must equal average variable costs.

Question

Quizplus · Accepted Answer

Average fixed costs are the fixed costs divided by the quantity produced, while average variable costs are the variable costs divided by the quantity produced. Since fixed costs do not vary with the level of production, they will decrease as output increases, leading to a decrease in average fixed costs. Meanwhile, variable costs will generally increase with an increase in production, leading to an increase in average variable costs. Therefore, at any given volume, average fixed costs will not necessarily equal average variable costs.

At Any Given Volume, Average Fixed Costs Must Equal Average