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What is the Relation Between Average Variable Cost and Average Total Cost, If Total Fixed Cost is Zero? - Economics

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What is the relation between Average Variable Cost and Average Total Cost, if Total Fixed Cost is zero?

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Solution

We know that

TC = TFC + TVC

Dividing both the side by'Q',we get

`(TC)/Q=(TFC)/Q+(TVC)/Q`

ATC = 0 AVC, here TFC = 0

Therefore, ATC = AVC

These cost curves will intersect each other.

Concept: Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
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