Cost eet for the Average Total Costs Average Variable Costs dit for the Midterm
ID: 1165842 • Letter: C
Question
Cost eet for the Average Total Costs Average Variable Costs dit for the Midterm t Readings and or the Midterm heet for the Final nal Exam edit for the Final Output edit Reading and x for the Final Exam Which of the following statements concerning the above diagram is TRUE The distance between the average total cost and the average variable cost curves (as shown above) becomes smaller as output increases The distance between the average total cost and the average variable cost curves (as shown above) becomes smaller as output increases because average vaniable costs because average fixed costs fall with output Messages on Board Email rise with output The distance between the average total cost and the average variable cost curves (as shown above) becomes smaller as output increases because average variable costs fall with output The distance between the average total cost and the average variable cost curves (as shown above) becomes smaller as output increases because the marginal product of labor is falling Tutoring The distance between the average total cost and the average vanable cost curves (as shown above) becomes smaller as output increases becaude the marginal product of labor is risingExplanation / Answer
The distance between the avearge total cost and the average variable cost curves becomes smaller as output increases because average fixed costs fall with output. As the vertical distance between ATC and AVC is equal to AFC and this declines as output increases , therefore, the distance between ATC and AVC gets smaller and smaller. Hence, option(A) is correct.