Question:
The vertical distance between ATC and AVC measures...........
The vertical distance between ATC and AVC measures...........
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Match each elasticity sign to whether goods are substitutes, complements, superior or inferior.
Updated On: Jul 7, 2026
- average fixed cost.
- total fixed cost.
- economic profit per unit.
- marginal cost.
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The Correct Option is A
Solution and Explanation
By definition, Average Total Cost equals Average Variable Cost plus Average Fixed Cost: \(ATC = AVC + AFC\).
Rearranging this gives \(AFC = ATC - AVC\), which is exactly the vertical gap between the ATC and AVC curves at any given output level.
As output rises, this gap narrows because fixed costs get spread across more units, though it never fully closes to zero, and it measures average fixed cost, matching option 1.
Rearranging this gives \(AFC = ATC - AVC\), which is exactly the vertical gap between the ATC and AVC curves at any given output level.
As output rises, this gap narrows because fixed costs get spread across more units, though it never fully closes to zero, and it measures average fixed cost, matching option 1.
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