Asked by Shilpa Heald on Jul 28, 2024
Verified
If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.
Marginal Cost
The change in the total expense associated with the production of an extra unit of a product, whether it be an increase or decrease.
Average Total Cost
The total cost of production divided by the number of goods produced, representing the average cost per unit of output.
- Identify the association between marginal cost and average total cost and its role in guiding production strategies.
Verified Answer
MS
Morgan SchlesigerJul 31, 2024
Final Answer :
False
Explanation :
The average total cost (ATC) could be falling if the marginal cost (MC) of the fifth unit is less than the ATC prior to producing the fifth unit, even if it's higher than the MC of the fourth unit. The ATC considers all units produced, not just the marginal comparison between two consecutive units.
Learning Objectives
- Identify the association between marginal cost and average total cost and its role in guiding production strategies.
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