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Economics · Oct / Nov 2021 · Paper 12 · Question 13

2281Firms’ costs, revenue and objectives

The diagram shows the total cost curve for a firm. What can be concluded about the firm?

  1. AIt has no fixed costs.
  2. BIt has no variable costs.
  3. CIts average fixed cost increases.
  4. DIts average variable cost is constant.

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Correct answer: D. Its average variable cost is constant.

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