Short run average cost curves

Short run average cost curves:

Average Fixed Cost (AFC):

The average fixed cost is a fixed cost per unit of output. This is acquired by dividing the total fixed cost by the number of units of the commodity generated.

Symbolically,

AFC = TFC / Q

Here,
AFC = Average fixed Cost
TFC = Total Fixed cost
Q = number of units of output generated

Assume that for a firm, total fixed cost is $ 2000 if output is 100 units, AFC will be  $ 2000/100 =  $ 20 and if output is 200 units, AFC will be  $ 2000/200 =  $10/- as total fixed cost is a steady quantity, average fixed cost will constantly fall as output raises; whenever output becomes very big, average fixed cost approaches to zero.

 

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