Asked by Aaron Portillo on Jun 12, 2024
Verified
Use the following two statements to answer this question: I. The average total cost of a given level of output is the slope of the line from the origin to the total cost curve at that level of output.
II) The marginal cost of a given level of output is the slope of the line that is tangent to the variable cost curve at that level of output.
A) Both I and II are true.
B) I is true, and II is false.
C) I is false, and II is true.
D) Both I and II are false.
Average Total Cost
The total cost per unit of output, calculated by dividing the total cost of production by the quantity of output.
Marginal Cost
The additional cost incurred to produce one more unit of a good or service.
Variable Cost Curve
A graphical representation that shows how total variable costs change with variations in output volume, helping firms visualize cost dynamics related to production levels.
- Detect and assess average, fringe, uniform fixed, and alterable variable costs.
Verified Answer
NA
Norma AlmanasirJun 19, 2024
Final Answer :
A
Explanation :
Both statements accurately describe the relationship between cost and output. Statement I refers to the average total cost, which includes both fixed and variable costs, and the slope of the line from the origin to the total cost curve reflects the total cost per unit of output. Statement II refers to the marginal cost, which only includes the additional variable cost incurred by producing one additional unit of output, and the slope of the line tangent to the variable cost curve reflects the variable cost per unit of output.
Learning Objectives
- Detect and assess average, fringe, uniform fixed, and alterable variable costs.