Asked by Sophie Hansen on Jul 07, 2024
Verified
When marginal cost is ABOVE average variable cost,average variable cost must be:
A) at its minimum.
B) at its maximum.
C) falling.
D) rising.
Marginal Cost
The money needed to produce an additional unit of a product or service.
Average Variable Cost
The total variable costs divided by the quantity of output produced, representing the variable cost incurred to produce each unit of output.
- Identify the factors that trigger the increase or decrease of average variable and total costs.
Verified Answer
TB
Tianna BattlesJul 12, 2024
Final Answer :
D
Explanation :
When marginal cost is above average variable cost, this means that the cost of producing an additional unit is higher than the average cost of producing each unit up to that point. This indicates that the variable costs are increasing at a faster rate than the total output, causing the average variable cost to rise. Therefore, the correct choice is (D) rising.
Learning Objectives
- Identify the factors that trigger the increase or decrease of average variable and total costs.