Asked by Meliza Acosta on May 06, 2024
Verified
Describe the relationship between average total cost and marginal cost.
Average Total Cost
The aggregate expense of manufacturing (comprising both fixed and variable expenditures) divided by the overall amount produced.
Marginal Cost
The incremental cost of producing an extra unit of a good or service.
- Assess the relationship between marginal cost and average total cost and their implications for decision-making.
Verified Answer
BR
Britannia RamstromMay 11, 2024
Final Answer :
If marginal cost (MC) is greater than average total cost (ATC), then ATC will increase. If MC is less than ATC, then ATC will decrease. If MC equals ATC, then ATC is unchanged. The minimum of ATC curve will intersect with the MC curve.
Learning Objectives
- Assess the relationship between marginal cost and average total cost and their implications for decision-making.
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