Question

What is the slope of the short-run average fixed cost curve?

• A. Negative
• B. Positive
• C. Zero
• D. None of these

Hint:

The average fixed cost curve flattens as output increases, showing that the fixed cost per unit of output decreases, but the slope is zero.

Answer 1

The Correct Option is C

Step 1: Understanding the short-run average fixed cost curve.
In the short run, average fixed cost (AFC) is the total fixed cost divided by the quantity of output produced. Since fixed costs do not change with output, the AFC curve declines as output increases. The slope of the AFC curve is zero because average fixed costs decrease, but the curve itself becomes flatter with increasing output.

Step 2: Analyzing the options.
(A) Negative: The AFC curve does not have a negative slope, as fixed costs do not decrease with output in the short run.
(B) Positive: The AFC curve does not have a positive slope either. It declines with increased output, but its slope is zero.
(C) Zero: Correct. The slope of the AFC curve is zero because fixed costs do not change with output in the short run, and the AFC curve flattens as output increases.
(D) None of these: This is incorrect because the correct answer is (C).

Step 3: Conclusion.
The slope of the short-run average fixed cost curve is zero. Therefore, the correct answer is (C) Zero.