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Tags
#cfa-level-1 #economics #has-images #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4

Question
A declining average fixed cost reflects [...] over more and more production units.
Answer
spreading a constant cost

Tags
#cfa-level-1 #economics #has-images #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4

Question
A declining average fixed cost reflects [...] over more and more production units.
Answer
?

Tags
#cfa-level-1 #economics #has-images #microeconomics #reading-15-demand-and-supply-analysis-the-firm #section-3-analysis-of-revenue-costs-and-profit #study-session-4

Question
A declining average fixed cost reflects [...] over more and more production units.
Answer
spreading a constant cost
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Dividing total fixed cost by quantity yields average fixed cost (AFC), which decreases throughout the production span. A declining average fixed cost reflects spreading a constant cost over more and more production units. At high production volumes, AFC may be so low that it is a small proportion of average total cost. In Exhibit 13, AFC declines from 100 at 1 unit, t

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