The production cost that varies inversely with output is the

Analyze the question: We need the cost that changes inversely with output. That means as output goes up, this cost goes down (and vice versa).

Explain the concept:

• Total fixed cost (TFC): Stays constant at every level of output (e.g., rent, insurance). It does not vary with output.
• Marginal cost (MC): The extra cost of producing one more unit. It first falls, then rises (U-shaped), so it is not inversely related to output.
• Average fixed cost (AFC): AFC = TFC ÷ Q
• Average cost (AC): AC = AFC + AVC. It is U-shaped, falling first and then rising.

Solution: Since AFC = TFC / Q and TFC is a constant, AFC is inversely proportional to output (Q).

Example: Suppose TFC = ₦1,000.

• At Q = 10, AFC = ₦100
• At Q = 100, AFC = ₦10
• At Q = 1,000, AFC = ₦1

As output rises, AFC keeps falling. This is the inverse relationship. It is why a rectangular hyperbola shape is used for the AFC curve. This is also the idea behind "spreading overhead".

The other options do not show a consistent inverse relationship:

• TFC is constant.
• MC and AC are U-shaped, so they fall and then rise.

Answer: C. Average fixed cost

Tip: Remember "AFC = TFC ÷ Q": whenever a fixed amount is divided by output, the result moves in the opposite direction to output. Also, the AFC curve never touches the axis and keeps falling, which is a favourite examiner's clue.