The shape of the average fixed cost curve is ........................

Option 1 -> AFC decreases as output increases, so it cannot slope upward.

Option 2 -> AFC = TFC/Q forms a rectangular hyperbola that continuously declines but never touches zero.

Option 3 -> A vertical curve would mean AFC is independent of quantity, which contradicts its definition.

Option 4 -> A horizontal curve would mean AFC remains constant, but it actually decreases with output.

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Hence, Option 2: Rectangular hyperbola -> The Average Fixed Cost (AFC) curve is a rectangular hyperbola because AFC = Total Fixed Cost / Quantity. Since TFC remains constant while quantity varies, AFC continuously decreases as output increases. The curve approaches both axes asymptotically - it never touches the x-axis (AFC never becomes zero) and never touches the y-axis (there must be some output). This inverse relationship between AFC and quantity produces the characteristic rectangular hyperbola shape. -> correct