Answer to Question #68158 in Microeconomics for usman

Question

Explain why the Average total cost curve and the Average variable cost curve moves closer together as output expand?

Answer 1

As the Average total cost is calculated as the sum of Average variable cost and Average fixed cost, and Average fixed cost inevitably decrease as output expand, so Average total cost increasingly consist of Average variable cost. That’s why Average total cost curve and the Average variable cost curve moves closer together in the case of output expand.