Why is the AFC curve called a rectangular hyperbola?

Accounting Dec 08, 2020

Expert Solution

The AFC curve is the average fixed cost per unit of output. The AFC curve slopes downward to the right that is, with the increase in the output, the average fixed cost will diminish which will result in AFC being a rectangular hyperbola. The multiplication of average fixed cost into the quantity of output gives the total fixed cost which is constant at all levels of output.

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