AFC, or Average Fixed Cost, is represented as a rectangular hyperbola because it is inversely related to the level of output in the short run. As production increases, the total fixed costs are spread over more units, causing AFC to decrease. This relationship follows the equation AFC = TFC/Q, where TFC is constant and Q (quantity produced) increases, resulting in the characteristic hyperbolic shape. Thus, AFC approaches zero as output becomes very large, illustrating the inverse relationship between fixed costs and output.
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To find the unit produced when total fixed costs (TFC), total variable costs (TVC), and total revenue (TR) are given, you can first calculate the total cost (TC) using the formula TC = TFC + TVC. Then, to determine the price per unit, divide the total revenue by the number of units sold (TR = Price × Quantity). Finally, rearranging the equation gives you Quantity = TR / Price. If the price per unit is not directly given, you may need additional information to find it.
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