In the short run, when the output of a firm increases, its average fixed cost

The correct answer is: B. Decreases

Average fixed cost (AFC) is a measure of how much it costs a firm to produce one unit of output, given that it has already incurred certain fixed costs. Fixed costs are costs that do not change with the level of output, such as rent, insurance, and depreciation.

In the short run, a firm cannot change its fixed costs. As a result, AFC decreases as output increases. This is because the fixed costs are spread out over a larger number of units of output. For example, if a firm has a fixed cost of $100 and produces 10 units of output, its AFC is $10 per unit. If the