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Economics is the study of how human beings make choice to allocate scarce resources to satisfy their unlimited wants in such a manner that consumers can maximize their satisfaction, producers can maximize their profits and the society can maximize its objectives.
Short run production function- It is that time period in which production of a commodity is increased by increasing the use of only variable inputs like labour and raw material while the fixed input remains constant.
Long run production function- It refers to that time period in which production of a commodity can be increased by employing both the variable and the fixed inputs.
Total fixed costs remains constant at different level of output, it follows that average fixed cost falls as the level of output is increased.
AVC is a dish shaped curve, influenced by law of variable proportions.
Hence, as long as average variable costs fall, Average total costs also falls. Beyond this point , for some time, though the AVC may be rising, the falling fixed cost overbears it resulting in declining AC. But ultimately AC must rise.