Which of the following falls continuously as output expands?
Answer Details
The correct answer is Average cost.
Average cost is the total cost per unit of output, which includes both fixed and variable costs. As output expands, the total cost increases, but if the average cost falls, it means that the cost per unit of output decreases. This is because the fixed cost is spread out over more units of output, resulting in a decrease in the average cost. Therefore, average cost falls continuously as output expands.