Google
Tuesday 
September 30, 2014 

AmosWEB means Economics with a Touch of Whimsy!

AmosWEBWEB*pediaGLOSS*aramaECON*worldCLASS*portalQUIZ*tasticPED GuideXtra CrediteTutorA*PLS
Today's Index
Yesterday's Index
229.4

Help us compile the AmosWEB Free Lunch Index. Tell us about your last lunch.

Skipped lunch altogether.
Bought by another.
Ate lunch at home.
Brought lunch from home.
Fast food drive through.
Fast food dine in.
All-you-can eat buffet.
Casual dining with tip.
Fancy upscale with tip.

More About the Index
is barter better?

Yes.
No.

SAVING FUNCTION: The positive relation between household saving and household disposable income. The saving function is commonly presented as the saving line or propensity-to-saving line. The slope of this line is the marginal propensity to save, which is the proportion of any additional income used for saving. The saving function and the marginal propensity to saving play key roles in the multiplier and accelerator concepts. Because consumption is the difference between disposable income and saving, the consumption function is a complementary relation to the saving function.

Visit the GLOSS*arama


AVERAGE FIXED COST CURVE:

A curve that graphically represents the relation between average fixed cost incurred by a firm in the short-run product of a good or service and the quantity produced. This curve is constructed to capture the relation between average fixed cost and the level of output, holding other variables, like technology and resource prices, constant. The average fixed cost curve is one of three average curves. The other two are average total cost curve and average variable cost curve. A related curve is the marginal cost curve.
Average Fixed Cost Curve
Average Fixed Cost Curve
The average fixed cost curve is negatively sloped. Average fixed cost is relatively high at small quantities of output, then declines as production increases. The more production increases, the more average fixed cost declines. The reason behind this perpetual decline is that a given FIXED cost is spread over an increasingly larger quantity of output.

The graph to the right is the average fixed cost curve for the short-run production of Wacky Willy Stuffed Amigos (those cute and cuddly armadillos and tarantulas). The quantity of Stuffed Amigos production, measured on the horizontal axis, ranges from 0 to 10 and the average fixed cost incurred in the production of Stuffed Amigos, measured on the vertical axis, ranges from a high of $6 to a low of $0.30. Actually, if the quantity is extended beyond 10 Stuffed Amigos, then average fixed cost is less than $0.30. Or if the quantity is reduced below 1/2 unit, then average fixed cost is greater than $6. For the geometrically inclined, this average fixed cost curve is a rectangular hyperbola.

This declining average fixed cost curve is a major reason that the average total curve is negatively sloped for relatively small output quantities. In fact, firms that use a lot of fixed inputs relative to variable inputs, such that fixed cost is a substantial share of total cost, spend a lot of their production time in the decreasing portion of the average total cost curve. This has a big impact on how these firms operate. If average total cost declines with additional production, then a firm can profitably charge a lower price with increased output.

<= AVERAGE FIXED COSTAVERAGE-MARGINAL RELATION =>


Recommended Citation:

AVERAGE FIXED COST CURVE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2014. [Accessed: September 30, 2014].


Check Out These Related Terms...

     | average cost | average fixed cost | average total cost curve | average variable cost curve | average total cost | average variable cost | total fixed cost | total fixed cost curve | variable cost | fixed cost | marginal cost curve | U-shaped cost curves |


Or For A Little Background...

     | opportunity cost | production | production cost | business | factors of production | microeconomics | short-run production analysis | law of diminishing marginal returns | marginal returns | marginal analysis | average product |


And For Further Study...

     | total variable cost | total variable cost curve | total cost | total cost curve | total cost and marginal cost | total cost curves | total variable cost and total product | legal business organizations | firm objectives | opportunity cost, production possibilities | profit | economic profit | accounting profit | normal profit | accounting cost | profit maximization | long-run average cost |


Search Again?

Back to the WEB*pedia


APLS

State of the ECONOMY

Retail Sales
August 2014
$444.4 million
Up 0.6% from July 2014 Source: Econ Stats Adm.

More Stats

ORANGE REBELOON
[What's This?]

Today, you are likely to spend a great deal of time searching for rummage sales trying to buy either several magazines on home repairs or a remote controlled sports car with an air spoiler. Be on the lookout for door-to-door salesmen.
Your Complete Scope

This isn't me! What am I?

A thousand years before metal coins were developed, clay tablet "checks" were used as money by the Babylonians.
"I believe that every right implies a responsibility, every opportunity, an obligation, every possession, a duty. "

-- John D. Rockefeller, industrialist

PPC
Production Possibilities Curve
A PEDestrian's Guide
Xtra Credit
Tell us what you think about AmosWEB. Like what you see? Have suggestions for improvements? Let us know. Click the User Feedback link.

User Feedback



| AmosWEB | WEB*pedia | GLOSS*arama | ECON*world | CLASS*portal | QUIZ*tastic | PED Guide | Xtra Credit | eTutor | A*PLS |
| About Us | Terms of Use | Privacy Statement |

Thanks for visiting AmosWEB
Copyright ©2000-2014 AmosWEB*LLC
Send comments or questions to: WebMaster