What happens to the difference between AC and AVC as output is increased?
Answers
Explanation:
The distance between the average total cost curve and the average variable cost curve gets smaller as production t increases. ATC curve is far above the AVC curve at early levels of output because the average fixed cost is a high percentage of the average total cost. But ATC curve tends o to come closer to AVC at higher levels of output because § the average fixed cost accounts for a relatively small percentage of the average total cost now. Notice that ATC curve never touches AVC curve because the average fixed cost is always positive. Thus, the distance between the 0 ATC curve and the AVC curve gets smaller as the level of output increases.Read more on Sarthaks.com - https://www.sarthaks.com/823884/difference-between-curve-and-avc-curve-decreases-with-increase-output-but-the-two-curves
Answer:
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