Answer:
Average Fixed Cost can be described as the fixed cost per unit of output produced. It is described by dividing the entire Fixed Cost by quantity of output produced. That is, \[AFC=TFC/Q\] where, TFC represents Total Fixed Cost Q represents units of output produced Average fixed cost continues to fall with an increase in the level of output but, it nerver reaches to zero because average fixed cost is a rectangular hyperbola. That is, it can never be zero. This happens because AFC is defined as the ratio of TFC to output. We know that TFC remains constant throughout all the output levels and as output increases, with TFC being constant, AFC decreases. When output level is close to zero, AFC is infinitely large and by contrast when output level is very large, AFC tends to be zero but never becomes zero. AFC can never be zero because it is a rectangular hyperbola and it never intersects the x-axis and thereby it can never be equal to zero.
You need to login to perform this action.
You will be redirected in
3 sec
