ECONOMICS
PROFIT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Total variable cost
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Total fixed cost
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Average total cost
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Average fixed cost
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Detailed explanation-1: -In the short run, when the output of a firm increases, its average fixed cost decreases. Fixed cost remains same irrespective of number of output produced. So, with increase in output, Fixed cost contribution decreases per unit.
Detailed explanation-2: -There are three short-run average cost measures: average variable cost, average fixed cost, and average total cost. Note that since variable cost generally increases with the amount of output produced, the average variable cost can increase or decrease as output increases.
Detailed explanation-3: -Variable cost reduces as output increases.
Detailed explanation-4: -The short-run cost comprises both the fixed cost (that do not differ with the change in the degree of end results) and variable cost (that differs with the changes in the level of degree of end results).