JAMB Economics 2022 Paper

Concept:Average fixed cost is the fixed cost spread over each unit of output, so it falls as output rises.Explanation:Average fixed cost is calculated as:$$AFC = \frac{TFC}{Q}$$Where $TFC$ is total fixed cost and $Q$ is the level of output.Since $TFC$ is constant, an increase in $Q$ makes the fraction $\frac{TFC}{Q}$ smaller.Therefore, average fixed cost falls when output increases and rises when output decreases.This means $AFC$ varies inversely with output.Total fixed cost does not change with output.Marginal cost and average cost do not have a fixed inverse relationship with output.Answer:C. Average fixed cost