CBSE BoardEnglish MediumSTD 11 CommerceEconomicsMICROECONOMICS CH : 8 CONCEPTS OF COST1 Mark
Question
As output increases, AC tends to be closer to AVC. Why?
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Answer
We know that, AC = AFC + AVC. As output increases, AFC must continuously fall, because TFC is constant. Consequently, the component of AFC in AC tends to shrink. This brings AC closer to AVC
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