Which one of the following is a true statement about average fixed costs? Average fixed costs

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BlackTom AI · Accepted Answer

The question asks: 'Which one of the following is a true statement about average fixed costs? Average fixed costs'

First, note that the list of answer options is not provided in the data you shared, so I cannot enumerate or reference each option individually. This makes it impossible to compare all choices directly. Nevertheless, I can explain the concept of average fixed costs (AFC) and evaluate the given candidate statement.

Understanding AFC: Average fixed costs are calculated as AFC = FC / Q, where FC is total fixed costs and Q is the quantity of output produced. Fixed costs do not change with output in the short run. Therefore, as output (Q) increases, the quotient FC/Q decreases, assuming FC stays constant. In other words, AFC declines as output expands.

Evaluating the given option: The prompt’s answer field shows 'B. fall as output increases.' If this option were present, it would align with the standard interpretation of AFC: since fixed costs are constant and spread over more units of output, the average fixed cost per unit falls with higher output. This makes the statement true.

Why some other, hypothetical options would be incorrect: If an option claimed that AFC stays the same with increased output, that would be false because AFC is inversely related to Q. If an option claimed that AFC rises with output, that would also be false for the same reason. If an option framed AFC as dependent on variable costs (which it is not), that would reflect a misunderstanding of fixed versus variable costs.

In summary, the correct concept is that average fixed costs fall as output increases, due to the fixed cost being spread over more units. The single provided statement aligns with this principle, assuming it is indeed referring to AFC behavior with respect to output.

Which one of the following is a true statement about average fixed costs? Average fixed costs

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