Average total cost and average variable cost are apart from each … - Vidyadip

Question

Average total cost and average variable cost are apart from each other by a constant factor.

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Answer

False. The difference between average total cost (ATC) and average variable cost (AVC) is average fixed cost (AFC) and average fixed cost can never be constant. Since AFC tends to decline with increase in output, the difference between ATC and AVC must reduce as output increases.

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