[amp_mcq option1=”Increases” option2=”Decreases” option3=”Remains constant” option4=”First declines and then rises” correct=”option1″]<\/p>\n
The correct answer is: A. Increases.<\/p>\n
Average fixed cost (AFC) is a firm’s fixed cost per unit of output. It is calculated by dividing the firm’s total fixed cost (TFC) by its output (Q). In the short run, a firm’s fixed costs are constant, so AFC will decrease as output increases. However, as output increases, the firm will eventually reach a point where its variable costs begin to increase more rapidly than its fixed costs. This is because the firm will need to hire more workers and purchase more materials in order to produce more output. As a result, AFC will eventually start to increase.<\/p>\n
Here is a brief explanation of each option:<\/p>\n
[amp_mcq option1=”Increases” option2=”Decreases” option3=”Remains constant” option4=”First declines and then rises” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-43685","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n