The Average Fixed Cost Curve

question 296

Multiple Choice

The average fixed cost curve

• A) is parallel to the x-axis.
• B) is the distance between the TC and TVC curves.
• C) slopes downward as output increases.
• D) increases as the cost of inputs rise.

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Definitions:

Social Security Tax

A tax levied on both employers and employees to fund the Social Security program, which provides retirement, disability, and survivors' benefits.

Labor

The human effort, both physical and mental, used in the production of goods and services, considered one of the main factors of production.

Deadweight Loss

A loss in total societal welfare that occurs when market equilibrium is not achieved or when market imperfections exist, leading to inefficient allocation of resources.

Relatively Inelastic

Describes a situation where the demand for a good or service changes by a smaller percentage than changes in its price.