If sales fall by 20 percent from 1,000,000 papers per month to 800,000 papers per month, what happens to the afc per paper?

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04-03-2017
Business

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If sales fall by 20 percent from 1,000,000 papers per month to 800,000 papers per month, what happens to the afc per paper?

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MissPhiladelphia MissPhiladelphia · Answer 1 · 2017-03-16T15:56:05+01:00

MissPhiladelphia MissPhiladelphia

16-03-2017

The average fixed cost of paper is the same. Average fixed cost or afc is the fixed costs of production per unit of goods. Falling sales of paper by 20% is not related to production cost but to profit. Thus, decrease in sales will not affect the average fixed cost of the paper.

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