Why AFC curve is a rectangular hyperbola? - Vidyadip

Question

Why AFC curve is a rectangular hyperbola?

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Answer

Average Fixed Cost (AFC) is derived from TFC, which remains constant for all levels of output whether output is zero or 100. Hence, AFC is per unit TFC. Because of this, the area under AFC remains constant for all levels of output. As a result, AFC curve is rectangular hyperbola.

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