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.

Posted Date: 3/13/2013 12:50:30 AM | Location : United States

Ask an Expert

Related Discussions:- Average fixed cost, Assignment Help, Ask Question on Average fixed cost, Get Answer, Expert's Help, Average fixed cost Discussions

Write discussion on Average fixed cost
Your posts are moderated

Write your message here..

Related Questions

Discuss shortnote on morality and ethics , Economics and Ethics : Morality ... Economics and Ethics : Morality and ethics are powerful motivations to behavior.  Thouh, economists suppose that rationality is a function of demonstrable self-interest.  That mean

Inflation and unemployment, Inflation And Unemployment: Inflation desc... Inflation And Unemployment: Inflation describes a persistent and an appreciable increase in the general price level. The inflation rate is measured as a percentage change in a

Demand, brife note on demand brife note on demand

Assignement, need help for my micro assignment need help for my micro assignment

Graph the demand and supply curves, The demand curve for oranges is given b... The demand curve for oranges is given by the equation P = 5 - Q/200. The supply curve is given by P = Q/800. Q is measured in oranges per day and price is measured in dollars per o

Discuss the short-run cost-output relations, Micro Economics 1. Discuss... Micro Economics 1. Discuss the short-run cost-output relations. 2. Write a short note on pure competition. 3. Describe excess profit criterion. 4. Discuss the vario

Need Homework help, If I submit an economics problem(Home work), How soon i... If I submit an economics problem(Home work), How soon it will be answered?

Theory of perfect competition, Perfect competition has the following charac... Perfect competition has the following characteristics: 1. Large number of firms - There are a large number of firms in the market. Due to this each firm produces a very small fr

Just in time scheduling - jit, Just in Time Scheduling  - JIT JIT tec... Just in Time Scheduling  - JIT JIT techniques are being widely adopted by operations managers in manufacturing companies in the West. JIT ideas have not only had a profound im

Define economies of scale, Q. Define Economies of Scale? Economies of S... Q. Define Economies of Scale? Economies of Scale: Most economic production requires producing firm or organization to make an initial investment (in real capital, in design and