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JAMB Economics 1999 Question 21

Question 21

Theory of Costs and Revenue

Which of the following falls continuously as output expands?

  1. A.Average fixed cost
  2. B.Marginal cost
  3. C.Average variable cost
  4. D.Average cost.
Show the answer and explanation

Answer: A (Average fixed cost)

Explanation

Fixed cost is shared over more and more units, so AFC keeps falling. MC, AVC and AC are U-shaped and eventually rise.