Asked by Julie Prine on Jul 30, 2024
Verified
If marginal cost is LESS than average total cost,then _____ cost is _____.
A) average total;increasing
B) average total;decreasing
C) marginal;necessarily increasing
D) marginal;necessarily decreasing
Average Total Cost
The aggregate expense of manufacturing divided by the total number of units produced.
Marginal Cost
The extra cost incurred from the production of an additional unit, emphasizing its role in decision-making processes.
- Comprehend the principle of marginal cost and its association with average costs.
Verified Answer
ZK
Zybrea KnightAug 03, 2024
Final Answer :
B
Explanation :
When the marginal cost is less than the average total cost, it means that the additional unit of production is adding less to the total cost than the average cost of all units. This situation indicates that the average cost will decrease with the production of an additional unit, causing the average total cost to decrease. Therefore, the correct choice is option B, where the average total cost is decreasing.
Learning Objectives
- Comprehend the principle of marginal cost and its association with average costs.