Asked by Michael Petropulos on Jul 15, 2024
Verified
If an increase in output results in a DECREASE in average total cost,the corresponding marginal cost is:
A) less than average total cost.
B) greater than average total cost.
C) equal to average total cost.
D) negative.
Marginal Cost
The climb in cost associated with generating another unit of a product or service.
Average Total Cost
The total cost of production (fixed and variable costs combined) divided by the quantity of output produced.
- Acquire knowledge about the concept of marginal cost and its linkage to average costs.
- Analyze the connection between marginal and average cost graphs.
Verified Answer
CJ
CHRISTINE JOY SANTOSJul 20, 2024
Final Answer :
A
Explanation :
If an increase in output results in a decrease in average total cost, it means that the marginal cost is less than the average total cost. This is because if the marginal cost were greater than the average total cost, then an increase in output would lead to an increase in average total cost, not a decrease. Therefore, the correct answer is A, less than average total cost.
Learning Objectives
- Acquire knowledge about the concept of marginal cost and its linkage to average costs.
- Analyze the connection between marginal and average cost graphs.
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