Assertion (A) : The average fixed cost curve is a rectangular hyperbola.
Reason (R) : Multiplication of average fixed cost with the quantity of output produced, always yields a fixed value.
In the light of the above statements, choose the most appropriate answer from the options given below :
Analyzing Average Fixed Cost Curve Properties
Assertion (A) Analysis: AFC as a Rectangular Hyperbola
The statement asserts that the Average Fixed Cost (AFC) curve is a rectangular hyperbola.
In economics, Average Fixed Cost is calculated as:
$ \text{AFC} = \frac{\text{Total Fixed Cost (TFC)}}{\text{Quantity of Output (Q)}} $
Since Total Fixed Cost (TFC) is constant in the short run, as the quantity of output (Q) increases, the AFC decreases. The product of AFC and Q always equals TFC:
$ \text{AFC} \times \text{Q} = \text{TFC} $
A curve where the product of the two variables (AFC and Q) is constant represents a rectangular hyperbola. Therefore, Assertion (A) is correct.
Reason (R) Analysis: TFC Multiplication Property
The statement explains that multiplying average fixed cost by the quantity of output produced always yields a fixed value. As shown above, this product equals Total Fixed Cost (TFC), which is indeed a fixed value in the short run.
This mathematical relationship is the defining characteristic of a rectangular hyperbola when plotted on a graph with quantity on one axis and cost per unit on the other. Thus, Reason (R) is correct.
Connecting Assertion and Reason
Reason (R) directly explains the mathematical property that causes the AFC curve to take the shape of a rectangular hyperbola, as stated in Assertion (A). The constant product (TFC) is the fundamental reason for the hyperbolic shape.
Therefore, both (A) and (R) are correct, and (R) provides the correct explanation for (A).
Conclusion
The most appropriate answer is that both statements are correct, and Reason (R) correctly explains Assertion (A).
Similar Questions
- Match List - I with List - II.
List - I List - II A. Yellow Pages I. Promotion of a product/brand in a movie in such a way to enter the subconscious mind of the customer B. Infomercials II. Banners, posters and stickers put inside the retail shop C. Point of purchase advertising III. Television commercial runs as typical as television program D. Product Placement IV. Directory of Local business names and products
Choose the correct answer from the options given below : - The revenue function of a firm is given as
$$R = 300000 + 2250x - 75x^2$$
Where R is the revenue and $x$ is the quantity sold.
The revenue maximizing level of quantity sold is - The effective rate, $r_e$ equivalent to the nominal rate r converted m times a year is given by :
- Which of the following are the methods for finding an Initial feasible solution for a Transportation problem ?
A. Stepping Stone Method
B. Vogel's Approximation Method
C. The North West Corner Rule
D. Lowest Cost Entry Method
E. Modified Distribution (MODI) Method
Choose the correct answer from the options given below : - Match List - I with List - II.
List - I List - II A. Matrix addition is commutative I. If O is the zero matrix of same order as that of the matrix A, then A + 0 = A = 0 + A B. Matrix addition is associative II. If A, B and C be three matrices of the same order, then (A + B) + C = A + (B + C) C. Existence of additive identity III. If A be any matrix, then A + (-A) = O = (-A) + A D. Existence of additive inverse IV. If A and B be two matrices of the same order then A + B = B + A
Choose the correct answer from the options given below : - "A" bought two life insurance policies, one from XYZ company and second from WXY company of a sum of ₹ 20,00,000 and ₹ 30,00,000. He met an accident and admitted to hospital and unfortunately dies. The legal representatives of the insured are entitled to get :
- A fire was set at 'X' house and left a wall of his neighbour 'Y' in a dangerous state. After a few days, a windstorm came and caused the wall to fall and damage Y's property covered under fire insurance. Choose the correct answer :
- If an assessee incurs any loss under the head "Income from House Property" and such loss is not fully adjusted under other heads of income in the same assessment year, then the balance loss shall be allowed to be carried forward and set off against "Income from House Property" in subsequent years subjects to a limit of :
- A firm of Chartered Accountants which satisfies all conditions of sections 184 and 40(b) for the Assessement year 2025-26, has paid remuneration to partners amounting to ₹ 2,75,000. The book profit of the firm is ₹ 41,050. The firm can claim deduction for remuneration paid to partners of :
- Arrange the following steps of computation of Income from House Property in Correct order :
A. Deductions under section 24 of Income Tax Act
B. Computations of Net Annual Value
C. Deduction of Municipal Taxes paid
D. Computation of Gross Annual Value
E. Computation of Expected Rent
Choose the correct answer from the options given below :
Important Questions from Miscellaneous
- Which of the following scheduler/schedulers is/are also called CPU scheduler ?
(A). Short Term Scheduler
(B). Long Term Scheduler
(C). Medium Term Scheduler
(D). Asymmetric Scheduler
Choose the correct answer from the options given below: - A situation where two or more processes are blocked, waiting for resources held by each other is called:
- External fragmentation occurs ________.
- Which disk scheduling algorithm looks for the track closest to the current head position?
- Which CPU scheduling algorithm prefers the process with the shortest burst time?
