If the​ firm's average cost curves are​ U-shaped, why does its average variable cost curve achieve its minimum at a lower level of output than the average total cost​ curve? The average variable cost curve will achieve its minimum at a lower level of output than the average total cost curve because A. average total cost equals average variable cost plus average fixed​ cost, and the average fixed cost curve continues to fall as more output is produced. B. average total cost equals average variable cost minus average fixed​ cost, and the average fixed cost of production reaches its minimum at a higher level of output than the average variable cost curve . C. average total cost equals average variable cost plus average fixed​ cost, and the average fixed cost of production is constant . D. average total cost equals average variable cost plus average fixed​ cost, and the decrease in average fixed costs with output is always smaller than eventual increases in average variable costs with output. E. average total cost equals average fixed cost plus marginal​ cost, and the marginal cost curve continues to fall as more output is produced.

Respuesta :

Answer:

A. average total cost equals average variable cost plus average fixed cost, and the average fixed cost curve continues to fall as more output is produced.      

Explanation:

The average cost is defined as the total cost of a product or item divided by the total number of the product produced. The average cost refers to how many firms or organizations choose to price their products.

The average cost curve is always a U-shaped curve.

The average total cost = average variable cost + average fixed cost

When we graph them, the average fixed cost is the difference between the U-shape ATC (average total cost) and the AVC (average variable cost).

The average variable cost is sloping downwards at all the levels of the output and as a result the average fixed cost also also continues to fall.

Thus the correct option is (A).