Asked by Austin Deaver on May 01, 2024
Verified
If average total cost is declining,marginal cost cannot be increasing.
Average Total Cost
The total cost of production (fixed plus variable costs) divided by the total quantity produced, indicating the cost per unit of output.
Marginal Cost
The increased expenditure resulting from manufacturing one more unit of a good or service.
Declining
A term describing a situation where a certain quantity or quality is decreasing over time.
- Understand the connection between the average total cost curve, average variable cost curve, and fixed costs.
Verified Answer
BG
Braden GourleyMay 04, 2024
Final Answer :
False
Explanation :
When average total cost (ATC) is declining, it means that the cost of producing each additional unit is less than the average cost of production up to that point. However, marginal cost (MC) can still be increasing if it is less than the ATC, because as long as the MC is below the ATC, it pulls the average down, but it can be rising towards the ATC.
Learning Objectives
- Understand the connection between the average total cost curve, average variable cost curve, and fixed costs.
Related questions
In the Short Run,and with Nonzero Fixed Costs,the Average Total ...
In the Short Run,if Marginal Cost Is Higher Than Average ...
If the Average Total Cost Curve and the Average Variable ...
In the Short Run,the Average Total Cost Curve Reaches Its ...
Average Total Cost Reveals How Much Total Cost Will Change ...