This diagram has ‘Cost £s per day’ on the vertical axis, which is marked from zero to 2500, in intervals of 500.

The horizontal axis is labelled ‘Quantity, thousands per day’ and this is marked from zero on the left up to 10 on the right.

Three curves are shown, one above the other. The upper curve is labelled ‘AC’. AC starts at a plot of 1000 Quantity, 2000 Cost. The curve slopes down steeply at first before gradually getting shallower to reach a minimum point at just over 5000 Quantity, 900 Cost. The curve then rises gradually.

The middle of the three curves lies below AC and is labelled ‘AVC’. AVC starts at a plot of 1000 Quantity, 1250 Cost. Its downward slope is shallower than AC and it reaches its minimum point at 4500 Quantity, 800 Cost. The curve then rises, with almost the same upward slope as the AC curve. It very gradually runs closer to the AC curve that lies just above it.

The lower curve is labelled ‘AFC’. AFC starts at a plot 1000 Quantity, 750 Cost. This curve slopes steeply down initially for a very short distance but it then becomes almost flat, with a very shallow downward slope. The curve ends just above the horizontal axis.

Two vertical upward arrows are shown, both running from the horizontal axis, a red one up to the minimum point of the AVC curve and a green one up to the minimum point of the AC curve.