Asked by Rainn Cline on May 08, 2024
Verified
If marginal cost is GREATER than average total cost:
A) average total cost is increasing.
B) average total cost is decreasing.
C) average total cost is unchanged.
D) marginal cost is decreasing.
Marginal Cost
The additional financial cost due to the creation of an extra product or service unit.
Average Total Cost
The average total cost is the total cost of production divided by the quantity of output produced.
- Understand the concept of marginal cost and its relationship with average costs.
Verified Answer
ZK
Zybrea KnightMay 09, 2024
Final Answer :
A
Explanation :
If marginal cost is greater than average total cost, it means the cost of producing one additional unit is higher than the average cost of all units produced. This will cause the average total cost to increase as more units are produced. Therefore, the correct answer is A, average total cost is increasing.
Learning Objectives
- Understand the concept of marginal cost and its relationship with average costs.
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