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The central problems of the economy arises because the resources in the economy are scarce and human wants are unlimited. Therefore, there is need for an efficient relationship between both the factors.
The central problem of "How to produce?" which is faced by the economy where the economy consider either labour intensive techniques or capital intensive techniques for the production of goods and services in the economy depending upon the available resources in the economy.
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A price index measures changes in prices between two points of time whereas a quantity index measures changes in the volume of goods produce.
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AFC curve is rectangular hyperbola because, AFC= TFC/Q. As TFC remains fixed at al level of output, with the rise in output, AFC fall. Since TFC is never zero, AFC curve doesnot touch horizontal axis.Thus the shape of AFC curve is rectangular hyperbola.
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Maheshwari Mansi 6 years ago
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