Question

# What is the relation between Average Variable Cost and Average Total Cost, if Total Fixed Cost is zero ?

Solution

## We know that:$$TC = TFC + TVC$$Dividing both the sides by 'Q', we get$$\dfrac{TC}{Q} = \dfrac{TFC}{Q} + \dfrac{TVC}{Q}$$$$ATC = 0 + AVC$$    $$[\therefore TFC = 0]$$Hence, $$ATC = AVC$$Graphically, both the cost curves will intersect each other.Economics

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