Average fixed cost, Microeconomics

Assignment Help:

Average Fixed Cost (AFC): AFC is the fixed cost per unit of output.

AFC = TFC/y

Since the TFC is constant throughout the short run, as y increases AFC will decline. Therefore, the AFC curve is downward sloping.

Average Variable Cost (AVC) : AVC is the variable cost per unit of output.

AVC = TVC/y.

AVC will generally decrease as the output increases. But because of the operation of the law of diminishing marginal product, the AVC will rise after a certain point. Notice that is it a mirror image of the average product curve. Manipulating the formulae of both will prove that AVC is inversely related to AP.


Related Discussions:- Average fixed cost

#economic teory and practise, how does economics bridge the gap between eco...

how does economics bridge the gap between economic teory and practise

#3, Consider a two-period economy with a single commodity (say leisure): x1...

Consider a two-period economy with a single commodity (say leisure): x1 is the con- sumption of leisure in period 1, and x2 is the consumption of leisure in period 2. When Peter ev

Describe one case that fits the story of prisoner dilemma, Describe one cas...

Describe one case that fits the story of Prisoner Dilemma in not more than 10 sentences. It should fit the following features and it should not be any of the examples we already ta

Design process, The outer shape of a football can be described via the foll...

The outer shape of a football can be described via the following equation               Using Matlab, plot the outer shape of a football in  red or orange using a line widt

Managerial theories of firm., Implications of Williams model of managerial ...

Implications of Williams model of managerial discretion in Nepalese industries

Why the productivity growth slowdown of america in 1973, The Productivity G...

The Productivity Growth Slowdown However in 1973 steady trend of climbing rates of productivity growth stopped cold. Between 1973 and 1995 measured growth in output per worker

Learning curve in practice, Learning Curve in Practice * Scenario - ...

Learning Curve in Practice * Scenario - A new firm enters chemical processing industry. * Do they: 1) Produce a low level output and sell at high price? 2) Produce

ELASTICITY, 2. Suppose the price of printing paper for digital cameras has ...

2. Suppose the price of printing paper for digital cameras has recently risen by 10 percent due to an increase in the cost of materials used in the finish for the paper. As a resu

Supply and demand with graphs, Supply function given by equation QS = 3P - ...

Supply function given by equation QS = 3P - 50. Write an equation proposals if: a) Government introduces subsidies of 5 $ per unit; b) the government introduced subsidies of 15%

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd