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Question
Can AFC curve touch the Y-axis and X-axis?
Short Answer
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Solution
- No, the AFC curve can never touch the X-axis or the Y-axis.
- At very low output, AFC is high but not infinite; hence, the curve fails to touch the Y-axis. As output increases, AFC decreases but never reaches zero; therefore, it never touches the X-axis.
- This is because the total fixed cost (TFC) is always a positive number.
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