Asked by Kyndal Hampton on Jul 15, 2024
Verified
The _____ cost curve is NOT affected by diminishing returns.
A) average fixed
B) average variable
C) average total
D) marginal
Cost Curve
A graphical representation showing how the cost of producing a good varies with the level of output.
Diminishing Returns
Diminishing returns is an economic principle stating that after a certain point, additional units of input result in progressively smaller increases in output.
Average Fixed
The fixed costs of production divided by the quantity of output produced, indicating the average fixed cost per unit.
- Understand thoroughly the aspects of variable, fixed, and comprehensive costs in the production environment.
- Explore how alterations in production levels affect average total costs, including both variable and fixed expenses.
Verified Answer
AF
Amindu FonsekaJul 21, 2024
Final Answer :
A
Explanation :
Diminishing returns only affects the short-run marginal and average variable cost curves, as additional units of the variable input add less and less to output due to capacity constraints in the short-run. The average fixed cost, which is the fixed cost per unit of output, remains constant regardless of the level of output because it is spread over more units as production increases. Therefore, the correct answer is A) average fixed cost.
Learning Objectives
- Understand thoroughly the aspects of variable, fixed, and comprehensive costs in the production environment.
- Explore how alterations in production levels affect average total costs, including both variable and fixed expenses.