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Economics · May / June 2024 · Paper 11 · Question 13

2281Firms’ costs, revenue and objectives

A firm has fixed costs of $20 and the following total variable costs. What happens to average total cost over this output range?

  1. AIt falls continuously.
  2. BIt falls then rises.
  3. CIt rises continuously.
  4. DIt rises then falls.

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Correct answer: A. It falls continuously.

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