Asked by Justin Brady on May 12, 2024
Verified
Average total cost is increasing whenever
A) total cost is increasing.
B) marginal cost is increasing.
C) marginal cost is less than average total cost.
D) marginal cost is greater than average total cost.
Average Total Cost
Average total cost is the total cost of production divided by the total quantity produced, representing the cost per unit of output produced.
Marginal Cost
The increase in total cost that arises from an extra unit of production, which is crucial for decision-making on the quantity of production and pricing.
Total Cost
Total cost is the complete amount of money it takes to produce a good or service, including both fixed and variable costs.
- Understand the concepts of total, fixed, variable, and marginal costs in production.
- Recognize and comprehend the effects of variations in marginal cost on the volume of production.
- Explore the connection between marginal cost, average total cost, and the efficiency scale in production.
Verified Answer
EB
Egypt BrownMay 14, 2024
Final Answer :
D
Explanation :
Average total cost increases when the marginal cost is greater than the average total cost, as this means the cost of producing an additional unit is higher than the current average, raising the overall average cost.
Learning Objectives
- Understand the concepts of total, fixed, variable, and marginal costs in production.
- Recognize and comprehend the effects of variations in marginal cost on the volume of production.
- Explore the connection between marginal cost, average total cost, and the efficiency scale in production.