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MMLU-Pro / 7016 / Explain why the average fixed cost curve (AFC) slopes down-ward throughout,…

Problem

Answer published by the source. Consult the official source to check your work against its answer.

question

Explain why the average fixed cost curve (AFC) slopes down-ward throughout, while the average variable cost curve (AVC) slopes down at first, but then turns upward.

category

economics

options

  1. The AFC slopes downward due to a decrease in demand for the product, while the AVC slopes upward from the start due to increasing variable costs.
  2. The AFC slopes upward as quantity increases
  3. The AFC slopes downward because it represents the spread of fixed costs over an increasing number of units, while the AVC initially decreases due to a fixed proportion of inputs and then increases as variable input prices rise.
  4. The AVC turns upward due to an increase in fixed inputs
  5. The AFC slopes downward as quantity increases because of increased efficiency in production, while the AVC initially decreases due to underutilization of variable inputs and then increases because of market forces.
  6. The AFC slopes downward because as quantity increases, the average fixed cost per unit decreases. The AVC slopes down at first due to fuller utilization of the fixed inputs and the extension of specialization but then turns upward due to the law of diminishing returns.
  7. The AFC remains constant throughout because it is independent of output, and the AVC slopes downward indefinitely as economies of scale are realized.
  8. The AFC slopes downward because as quantity increases, the total fixed cost is spread over more units. The AVC initially falls due to technological advances, but then rises because of increased labor costs.
  9. The AVC always slopes downwards
  10. Both the AFC and AVC slope downward as quantity increases due to continuous improvements in production technology and efficiency.

src

stemez-Economics

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Source and history

upstream_id / Original problem ID
7016
task_id
b4a03541-f5b5-5606-85da-910d682d8fac
task_key
default--test--7016
task_revision_id
1
config / split
default / test

Official source

initial import