One feature of the average fixed cost is that it

1. Analyze the question We need a feature of the average fixed cost (AFC) curve.

2. Explain the concept Average fixed cost is total fixed cost divided by output:

AFC = TFC ÷ Q

Total fixed cost does not change as output changes. So as output (Q) increases, the same TFC is spread over more units, and AFC falls.

3. Check each option

• A. Falls continuously but is never equal to zero. Correct. As Q grows, TFC/Q gets smaller and smaller. Because TFC is a positive number, AFC gets closer to the horizontal axis but never touches it. The AFC curve is a rectangular hyperbola.
• B. U-shaped and intersects the Y-axis. Wrong. The U-shape belongs to average total cost (ATC), average variable cost (AVC) and marginal cost (MC). AFC is a downward-sloping curve, and it never meets the Y-axis because at Q = 0 the value is undefined.
• C. Rises and falls faster than the marginal cost. Wrong. AFC never rises. It only falls.
• D. Always higher than the average variable cost. Wrong. At low output AFC may be higher than AVC, but as output increases AFC keeps falling and becomes smaller than AVC. There is no rule that it is always higher.

4. Answer The correct option is A.

5. Exam tip Remember: AFC only falls, never rises, and never touches zero. If an option says AFC is "U-shaped" or "rises," eliminate it immediately. Only AVC, ATC and MC are U-shaped.