Average fixed cost
Average fixed cost (AFC) equals Total Fixed Cost ÷ Quantity (TFC ÷ Q). It represents the fixed cost allocated to each unit of output and continuously declines as output increases.
Real World
Netflix spends roughly $17 billion annually on content — a fixed cost spread across 260 million subscribers, giving an AFC of about $65 per user that falls with every new sign-up.
Exam Focus
Sketch a declining AFC curve and note it never reaches zero — examiners reward awareness of its asymptotic shape.
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