30.The shape of the average fixed cost curve is: A. U' shape B. Horizontal C. Vertical D. Rectangular hyperbola
Question
30. The shape of the average fixed cost curve is:
A. U' shape
B. Horizontal
C. Vertical
D. Rectangular hyperbola
Solution
The shape of the average fixed cost curve is D. Rectangular hyperbola.
Here's why:
Fixed costs are costs that do not change with the level of output. Examples include rent, salaries, and insurance. Because these costs are constant, when we spread them out over more and more units of output, the average fixed cost per unit goes down.
This is why the average fixed cost curve is a rectangular hyperbola. As output increases, average fixed cost decreases, but it never reaches zero. This creates a curve that gets closer and closer to the x-axis (output) but never touches it, which is the shape of a rectangular hyperbola.
Similar Questions
When it produces 100 units, a firm’s total variable cost is $300 and its total fixed cost is $2700. What is the average cost?1 point$3$24$27$30
Explain why the average cost line will usually be U-shaped in the short run. (5 marks)
43.Under the Marginal cost pricing, the price is determined on the basis of; A. Fixed cost B. Variable cost C. Total cost D. Average cost
A firm has fixed costs of $400, average total costs of $3 and average variable costs of $2.50. The output of the firm is _____________.
Product Costs set a(n) ___________ to a product’s price.a.demand curveb.floorc.ceilingd.experience curvee.break-even cost
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.