Asked by steven belizaire on Jun 01, 2024
Verified
If the marginal cost curve is above the average variable cost curve, then
A) average variable cost is increasing.
B) average variable cost is decreasing.
C) average variable cost is constant.
D) marginal cost is decreasing.
Average Variable Cost
The total variable costs divided by the quantity of output produced; it fluctuates with changes in output.
Marginal Cost
The increase or decrease in the total cost that arises from producing one additional unit of a good or service.
- Absorb the concepts pertaining to Marginal Cost (MC), Average Variable Cost (AVC), Average Fixed Cost (AFC), Total Variable Cost (TVC), Total Fixed Cost (TFC), Total Cost (TC), and Average Total Cost (ATC).
- Delve into the behavior and correlation of cost curves (MC, AVC, AFC, TC, ATC) within the scope of short-run production activities.
Verified Answer
ZK
Zybrea KnightJun 03, 2024
Final Answer :
A
Explanation :
When the marginal cost curve is above the average variable cost curve, it means that the cost of producing one more unit is higher than the average of all units produced so far, which causes the average variable cost to increase.
Learning Objectives
- Absorb the concepts pertaining to Marginal Cost (MC), Average Variable Cost (AVC), Average Fixed Cost (AFC), Total Variable Cost (TVC), Total Fixed Cost (TFC), Total Cost (TC), and Average Total Cost (ATC).
- Delve into the behavior and correlation of cost curves (MC, AVC, AFC, TC, ATC) within the scope of short-run production activities.
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