Average Fixed Cost
Definition
Fixed cost divided by quantity. Always declines as output rises — fixed costs spread over more units.
Example
$1,000 fixed cost over 100 units = $10/unit; over 1,000 units = $1/unit.
Fixed cost divided by quantity. Always declines as output rises — fixed costs spread over more units.
$1,000 fixed cost over 100 units = $10/unit; over 1,000 units = $1/unit.