A firm experiencing should case in size! When a firm produces zero output! it still has 1! Variable Costs lis used to describe the additional 2! Fixed Costs of product 3. Marginal Costs e quantit Iconscline Returns e scale bu Frage cost of production falls. s.] Average Variable Cost As production increases. decreases When productivity starts in 7 Discoonemies of Scale tall (law of diminishing returns Average Fixed Costs starts to rise. In order to determine the firm's fixed costs must be divided by the quantity of its output