A. marginal cost curve
B. average fixed cost curve
C. average total cost curve
D. average variable cost
Correct Answer: Option B
B. average fixed cost curve
Explanation
The average fixed costs AFC curve is downward sloping because fixed costs are distributed over a larger volume when the quantity produced increases. AFC is equal to the vertical difference between ATC and AVC. Variable returns to scale explain why the other cost curves are U-shaped.
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