Figure 14-2Refer to Figure 14-2. Curve A is always declining because

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BlackTom AI · Accepted Answer

The question refers to Figure 14-2 and asks why Curve A is always declining.
First, I restate what Curve A represents: in typical cost diagrams, a steadily declining curve that falls as quantity increases is characteristic of average fixed cost (AFC), which drops because fixed costs are spread over a larger quantity of output.
Option presented: c. we are dividing fixed costs by higher and higher levels of output.
Why this is correct: as output expands, the same total fixed cost is allocated over more units, reducing the fixed cost contribution per unit. This causes AFC to decline monotonically with quantity, which matches Curve A's shape in the graph.
Why other reasons (if they existed) would be incorrect in this context: any statement attributing Curve A’s decline to decreasing variable costs, increasing productivity, or economies of scale in variable costs would be inaccurate for AFC, since AFC excludes variable costs and is driven solely by how fixed costs are spread over output. Without alternative options to compare, we can still conclude that the declining nature of Curve A aligns with the concept of dividing fixed costs by higher output levels, which reduces the per-unit fixed cost as quantity rises.

Figure 14-2Refer to Figure 14-2. Curve A is always declining because

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Figure 14-2Refer to Figure 14-2. Curve A is always declining because

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