Explanation:
To determine the correct relationship between AFC (Average Fixed Cost), AVC (Average Variable Cost), and ATC (Average Total Cost), we need to understand the definitions of these cost concepts.

1. Average Fixed Cost (AFC): AFC is the total fixed cost divided by the quantity produced. It represents the fixed cost per unit of output. AFC decreases as the quantity produced increases because the fixed cost is spread over a larger number of units.

2. Average Variable Cost (AVC): AVC is the total variable cost divided by the quantity produced. It represents the variable cost per unit of output. AVC typically decreases initially due to economies of scale and then may increase as the law of diminishing returns sets in.

3. Average Total Cost (ATC): ATC is the total cost divided by the quantity produced. It represents the cost per unit of output, including both fixed and variable costs. ATC is the sum of AFC and AVC.

Now let's evaluate the given options:

a) AFC = AVC + ATC: This option is incorrect because AFC and AVC are components of ATC, not equal to ATC. The correct relationship is ATC = AFC + AVC.

b) ATC = AFC - AVC: This option is also incorrect because it suggests that AFC is subtracted from AVC to obtain ATC. However, the correct relationship is ATC = AFC + AVC, as explained earlier.

c) AVC = AFC + ATC: This option is incorrect because it suggests that AFC and ATC are added to obtain AVC. However, the correct relationship is ATC = AFC + AVC, not AVC = AFC + ATC.

d) AFC = ATC - AVC: This option is correct. The relationship between AFC, ATC, and AVC is given by ATC = AFC + AVC. By rearranging this equation, we can obtain AFC = ATC - AVC.

Therefore, the correct answer is option 'D': AFC = ATC - AVC.