Question

Q15. Why does the gap between ATC and AVC go on diminishing with increasing numbers of output?
Explain with the help of schedule and diagram.​

Answer 1

Answer:

As we increase the level of output, the difference between ATC and AVC decreases because ATC = AFC + AVC and Total Fixed Cost remain constant at all levels of output, but with rise in level of output, AFC decreases. That's why the difference between ATC and AVC decreases with rise in level of output

Answer 2

Answer:

Now the gap between average total costs (ATC, or AC as you have written it) and average variable costs (AVC) is comprised by these diminishing average fixed costs. ... So, due to the fixed TFC the AFC reduces with successive increase in the level of output. Hence, the gap between AC and AVC curve reduces.

Explanation:

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