Q. 145.0( 3 Votes )

# What are the aver

Answer :

**Average fixed cost** is per unit cost on fixed factors, it decreases with increase in output.

**Average fixed cost** = Total Fixed Cost / No. of Units Produced

**Cost Schedule**

**Graph**

**Average variable cost** is per unit cost of variable factors it remains constant.

**Average variable cost** = Total Variable Cost / No. of Units Produced

**Cost Schedule**

**Graph**

**Average total cost** means total cost per unit of output it is a u shaped curve like average variable cost. The average fixed cost is represented by a rectangular hyperbola

**Average total cost** = Total Cost / No. of Units Produced

**Cost Schedule**

**Graph**

Relationship between Average Fixed Cost, Average Variable Cost, and Average Cost -

• Average fixed cost curve is rectangular hyperbola.

• It falls continuously to the right but will never touch the x-axis because average fixed cost can never be zero.

• Average variable cost and average total cost or average cost curve is U shaped.

• Average cost curve lies above average variable cost curve and as output increases the vertical difference between two curves will decrease but they will never intersect.

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