hich of the following statements is correct?

Question

Average fixed cost is represented graphically as a U-Shaped curve.

Fixed cost remains the same regardless of the level of production.

Average fixed cost remains the same regardless of the level of production.

Average fixed cost is always increasing as production increases.

Answer 1

The correct statement is:

Fixed cost remains the same regardless of the level of production.

Here's a brief explanation of the other statements:

• Average fixed cost is represented graphically as a U-Shaped curve.: This statement is incorrect. Average fixed cost (AFC) actually decreases as production increases because fixed costs are spread over more units.

• Average fixed cost remains the same regardless of the level of production.: This statement is also incorrect. AFC decreases as production increases.

• Average fixed cost is always increasing as production increases.: This statement is incorrect, as mentioned above, because AFC decreases with increased production.

Therefore, the only correct statement relates to fixed costs remaining constant regardless of the level of production.