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Which of the following curves never touch any axis but is downward?
- a)Marginal cost curve
- b)Total cost curve
- c)Average fixed cost curve
- d)Average variable cost curve
Correct answer is option 'C'. Can you explain this answer?
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Verified Answer
Which of the following curves never touch any axis but is downward?a)M...
Average fixed cost is the total fixed cost divided by the number of units of output produced. Therefore,
AFC = TFC/Q
Where Q represents the number of units of output produced.
Thus average fixed cost is the fixed cost per unit of output.
Average fixed cost curve slopes downward throughout its length. As output increases, the total fixed cost spreads over more and more units and therefore average fixed cost becomes less and less. When output becomes very large, average fixed cost approaches zero.
It is seen that average fixed cost curve continuously falls throughout. Mathematically speaking, average fixed cost curve approaches both axes asymptotically. In other words, AFC curve gets very nearer to but never touches either axis.
Most Upvoted Answer
Which of the following curves never touch any axis but is downward?a)M...
Explanation:
The correct answer is option 'C' i.e. Average fixed cost curve.
Average fixed cost (AFC) curve is the curve that shows the fixed cost per unit of output. It is derived by dividing the total fixed cost by the level of output. As fixed costs are constant irrespective of the level of output, the AFC curve will gradually decrease as output increases, resulting in a downward slope.
The following are the reasons why the AFC curve never touches any axis but is downward:
1. Fixed cost: Fixed cost is the cost that remains constant irrespective of the level of output. Therefore, the AFC curve will never touch the horizontal axis (x-axis) as it will always have some value.
2. Downward slope: The AFC curve has a downward slope because as the level of output increases, the fixed cost is spread over a larger number of units, resulting in a decrease in the average fixed cost.
3. No intercept: The AFC curve will never touch the vertical axis (y-axis) as it does not have any intercept. This is because fixed cost is a sunk cost and cannot be recovered even if there is no production.
In conclusion, the AFC curve never touches any axis but is downward because fixed cost remains constant, the average fixed cost decreases with an increase in output, and there is no intercept on the vertical axis.
The correct answer is option 'C' i.e. Average fixed cost curve.
Average fixed cost (AFC) curve is the curve that shows the fixed cost per unit of output. It is derived by dividing the total fixed cost by the level of output. As fixed costs are constant irrespective of the level of output, the AFC curve will gradually decrease as output increases, resulting in a downward slope.
The following are the reasons why the AFC curve never touches any axis but is downward:
1. Fixed cost: Fixed cost is the cost that remains constant irrespective of the level of output. Therefore, the AFC curve will never touch the horizontal axis (x-axis) as it will always have some value.
2. Downward slope: The AFC curve has a downward slope because as the level of output increases, the fixed cost is spread over a larger number of units, resulting in a decrease in the average fixed cost.
3. No intercept: The AFC curve will never touch the vertical axis (y-axis) as it does not have any intercept. This is because fixed cost is a sunk cost and cannot be recovered even if there is no production.
In conclusion, the AFC curve never touches any axis but is downward because fixed cost remains constant, the average fixed cost decreases with an increase in output, and there is no intercept on the vertical axis.
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Community Answer
Which of the following curves never touch any axis but is downward?a)M...
Average fixed cost is such a cost that a firm has to incur in any phase , i.e whether it is facing normal,supernormal profits or even losses,it has to pay some fixed cost and thus it can never touch X axis which means it can never be zero.
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