Asked by Diadima Young on Jul 08, 2024
Verified
If the marginal cost curve is below 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 increasing.
Average Variable Cost
The per-unit variable cost, found by dividing the total variable expenses by the amount of output generated.
Marginal Cost
The cost of producing one additional unit of a good or service, which is used in decision-making about output levels.
- Familiarize oneself with the theory behind 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).
- Explore the manner in which cost curves (MC, AVC, AFC, TC, ATC) operate and relate during the short-term production process.
Verified Answer
ZK
Zybrea KnightJul 15, 2024
Final Answer :
B
Explanation :
When the marginal cost curve is below the average variable cost curve, it means that the additional cost of producing one more unit is less than the average of all units produced so far, which leads to a decrease in the average variable cost.
Learning Objectives
- Familiarize oneself with the theory behind 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).
- Explore the manner in which cost curves (MC, AVC, AFC, TC, ATC) operate and relate during the short-term production process.