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#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
At high production volumes, AFC may be so low that it is a small proportion of average total 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, to 20 at 5 units, and then to 10 at an output level of 10 units. <html>
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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, to 20 at 5 units, and then to 10 at an output level of 10 units. <html>
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