# When the average total cost curve is downward sloping?

## When the average total cost curve is downward sloping?

The downward sloping portion of the curve is an economy of scale, the average cost rises proportionately less to output.

What is average fixed cost Why does it go decreasing?

As the total number of units of the good produced increases, the average fixed cost decreases because the same amount of fixed costs is being spread over a larger number of units of output. 2.In economics, average fixed cost (AFC) is the fixed costs of production (FC) divided by the quantity (Q) of output produced.

When the average total cost curve is downward sloping what must be true about marginal cost curve?

When the average total cost curve is downward-sloping, what must be true about the marginal cost curve? It is U-shaped. It is a straight line. It is upward-sloping.

### What does the average fixed cost curve look like?

Average fixed cost curve looks like a rectangular hyperbola. It is defined as the ratio of TFC to output. AFC can never be zero because it is a rectangular hyperbola and it never intersects the x-axis and thereby can never be equal to zero.

What is total cost curve?

TOTAL COST CURVE: A curve that graphically represents the relation between the total cost incurred by a firm in the short-run production of a good or service and the quantity produced. The total cost curve is a cornerstone upon which the analysis of short-run production is built.

What is total fixed cost curve?

TOTAL FIXED COST CURVE: A curve that graphically represents the relation between total fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. The reason for such straightforwardness is that total fixed cost is fixed.

## How is fixed cost curve?

Average fixed costs are found by dividing total fixed costs by output. As fixed cost is divided by an increasing output, average fixed costs will continue to fall. The average fixed cost (AFC) curve will slope down continuously, from left to right.

Why are cost curve U-shaped?

The average cost curve is u-shaped because costs reduce as you increase the output, up to a certain optimal point. From there, the costs begin rising as you increase the output. Average cost is defined as the total costs (fixed costs + variable costs) divided by total output.

What is total product curve?

A total product curve shows the quantities of output that can be obtained from different amounts of a variable factor of production, assuming other factors of production are fixed.

### When does the average cost curve rise or fall?

The average cost and marginal cost curves reflect the same relationship as shown in figure 4.2 a. When the marginal cost curve is less than average cost, the AC curve falls and when marginal cost is greater than average cost, the AC curve rises.

How are the short run and long run cost curves related?

Relationship of the Short-Run Average Cost Curves and the Long-Run Average Cost Curve LAC: In the short run, some inputs are fixed and others are varied to increase the level of output. The long run is a period of time which the firm can vary all its inputs. In long run none of the factors is fixed and all can be varied to expand output.

What does gap between total and variable cost mean?

B) The gap between the average total cost curve and the average variable cost curve equals marginal cost. C) The gap between the average total cost curve and the average variable cost curve narrows as output increases. D) The marginal cost curve intersects the average variable cost curve at minimum average variable cost.

## What are the curves on the CHP 11 curve?

B) total, average, and marginal product curves upward and total, average, and marginal cost curves downward. C) total, average, and marginal product curves downward and total, average, and marginal cost curves upward. D) total, average, and marginal product curves downward and total, average, and marginal cost curves downward.