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January 18, 2018 

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DECLINE STAGE: The final stage of the product life cycle, characterized by a drastic drop off in profits. A company needs to decide how long to continue to support a product during this stage. Advertising and promotion can help maintain sales for a period of time. Ultimately, the cost-benefit tradeoff forces the business to discontinue the manufacturing of a product in this stage. Sometimes this happens quite rapidly and in some cases the product continues in this stage for many years.

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AVERAGE FIXED COST: Fixed cost per unit of output, found by dividing total fixed cost by the quantity of output. Average fixed cost is one of three related cost averages. The other two are average variable cost and average total cost. Average fixed cost, usually abbreviated AFC, decreases with larger quantities of output. The logic behind this relationship is relatively simply. Because fixed cost is FIXED and does not change with the quantity of output, a given cost is spread more thinly per unit as quantity increases. A thousand dollars of fixed cost averages out to $10 per unit if only 100 units are produced. But if 10,000 units are produced, then the average shrinks to a mere 10 cents per unit.

     See also | fixed cost | total fixed cost | average variable cost | average total cost | marginal cost | fixed input | total cost |


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AVERAGE FIXED COST, AmosWEB GLOSS*arama, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: January 18, 2018].


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AVERAGE FACTOR COST, MONOPSONY

Total factor cost per unit of factor input employed by a monopsony in the production of output, found by dividing total factor cost by the quantity of factor input. Average factor cost, abbreviated AFC, is generally equal to the factor price. However, using the longer term average factor cost makes it easier to see the connection to related terms, including total factor cost and marginal factor cost.

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