Average Fixed Cost

question 40

Multiple Choice

Average fixed cost:

• A) remains unchanged as output expands.
• B) is defined as the change in total cost divided by the change in output.
• C) always increases as output increases.
• D) always decreases as output expands.

Understand the concept and calculation of the four-firm concentration ratio in various market structures.

Recognize the significance of the Herfindahl index in measuring market concentration and its implications for competition.

Analyze the transition of market structures from monopolistic competition to oligopoly and its effects on concentration ratios.

Understand the dynamics of interindustry competition and its effects on market structure.

---

Definitions:

Irritability

A state of increased sensitivity to stimuli resulting in easy annoyance or anger.

Psychoactive Drugs

Chemical substances that affect the mind, mood, and other mental processes.

Hypnosis

A trance-like state of focused attention, reduced peripheral awareness, and heightened suggestibility.

Memory Accuracy

Refers to the degree to which remembered information mirrors the actual events that occurred.