Total Fixed Cost (TFC)

question 264

Multiple Choice

Total fixed cost (TFC)

• A)falls as the firm expands output from zero, but eventually rises.
• B)falls continuously as total output expands.
• C)varies directly with total output.
• D)does not change as total output increases or decreases.

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Definitions:

ATC

Average Total Cost, which refers to the total cost per unit of output produced, calculated by dividing the total cost by the quantity of output.

AVC

Average Variable Cost, which represents the variable costs of production (costs that change with output) divided by the quantity of output.

Average Total Cost

Calculated as the sum of all production costs divided by the number of units produced, representing the per unit cost of production.

Average Variable Cost

The sum of all costs that vary with output levels, divided by the total output generated.