Question

Assertion (A): Average Fixed Cost (AFC) curve is a rectangular hyperbola.

Reason (R): Total Fixed Cost (TFC) = Average Fixed Cost (AFC) × Q.

Options

• Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation for Assertion (A).

• Both Assertion (A) and Reason (R) are true, but reason (R) is not the correct explanation for Assertion (A).

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation for Assertion (A).

Explanation:

Both statements are true. Since TFC remains constant, AFC varies inversely with output: AFC = TFC ÷ Q. This constant-product relationship gives the AFC curve its rectangular-hyperbola shape.