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JAMB Economics 2009 Question 20

Question 20

Theory of Costs and Revenue

As the level of output increases, the average fixed cost of a firm will

  1. A.continue to increase
  2. B.remain unchanged
  3. C.continue to decrease
  4. D.be equal to the total cost
Show the answer and explanation

Answer: C (continue to decrease)

Explanation

The same fixed cost is shared over more and more units, so AFC keeps falling.