The average variable cost curve ?
Correct answer: B. Converges with the average cost as output increases
- A. is derived from the average fixed costs
- B. Converges with the average cost as output increases
- C. Equals the total costs divided by the output
- D. Equals revenue minus profits
Explanation
Average cost equals average variable cost plus average fixed cost. As output increases, average fixed cost approaches zero, so the average variable cost and average cost curves converge.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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