Question

Class 12 learn sample economics 1 ਹੋhow does afc change as output increases

Answer 1

n economics, average fixed cost (AFC) is the fixed costs of production (FC) divided by the quantity (Q) of output produced. Fixed costs are those costs that must be incurred in fixed quantity regardless of the level of output produced.

{\displaystyle AFC={\frac {FC}{Q}}.} AFC={\frac  {FC}{Q}}.

Average fixed cost is fixed cost per unit of output. As the total number of units of the good produced increases, the average fixed cost decreases because the same amount of fixed costs is being spread over a larger number of units of output.

Average variable cost plus average fixed cost equals average total cost:

{\displaystyle ATC=AVC+AFC} ATC=AVC+AFC