In U-Shaped Average Total Cost Curve above Section 11.4 exhibit 2, why does AFC continue to fall even while ATC rises at very high output? Section 11.4U-Shaped Average TotalCost Curveexhibit 2High AFCHigh ATCHigh MCHigh ATCMCАТСMinimumof ATCDiminishing marginalproduct sets inAFC9SMALLQuantity of OutputLARGEAt low levels of output, ATC is high because AFC is high-thefixed plant is underutilized. At high levels of output (close tocapacity), the fixed plant is overutilized, leading to high MC and,consequently, high ATC. It is diminishing marginal product thatcauses the MC, and eventually the AVC and ATC, to rise.Cost per Unit (dollars)

Average fixed cost (AFC) refers to the total fixed cost (TFC) per unit of output AFC = TFC/Q Where Q…

Answered: In U-Shaped Average Total Cost Curve…

In U-Shaped Average Total Cost Curve above Section 11.4 exhibit 2, why does AFC continue to fall even while ATC rises at very high output?

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Concept explainers

Short-Run Costs and Long-Run Costs

Cost of short-run and the long-run is an economic term that describes the cost involved in the production of goods in a firm in the short as well as long period.

Question

In U-Shaped Average Total Cost Curve above Section 11.4 exhibit 2, why does AFC continue to fall even while ATC rises at very high output?

Section 11.4
U-Shaped Average Total
Cost Curve
exhibit 2
High AFC
High ATC
High MC
High ATC
MC
АТС
Minimum
of ATC
Diminishing marginal
product sets in
AFC
9SMALL
Quantity of Output
LARGE
At low levels of output, ATC is high because AFC is high-the
fixed plant is underutilized. At high levels of output (close to
capacity), the fixed plant is overutilized, leading to high MC and,
consequently, high ATC. It is diminishing marginal product that
causes the MC, and eventually the AVC and ATC, to rise.
Cost per Unit (dollars)

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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