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Economics · May / June 2020 · Paper 12 · Question 12

2281Firms’ costs, revenue and objectives

The table shows total fixed and total variable costs at different levels of output for a firm. What happens as output rises?

  1. AAverage fixed cost falls.
  2. BAverage fixed cost rises.
  3. CAverage variable cost remains constant.
  4. DAverage variable cost rises.

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Correct answer: A. Average fixed cost falls.

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