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At the start of production, fixed costs are higher than the variable costs but as production increases the variable costs increase. Thus, as quantity increases,
At the start of production, fixed costs are higher than the variable costs but as production increases the variable costs increase. Thus, as quantity increases, both the variable costs and, consequently, the total costs will continue to increase. The situation forces the ATC and AVC curves to move closer to each other as the quantity continues to increase.
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