Asked by Analise Johnson on May 31, 2024
Verified
If marginal cost exceeds average total cost in the short run, then which is likely to be true?
A) Average total cost is increasing.
B) Average variable cost is decreasing.
C) Average total cost is less than average variable cost.
D) Marginal cost is less than average variable cost.
Average Total Cost
The total cost of production (fixed and variable costs combined) divided by the total quantity of output produced.
Average Variable Cost
Average variable cost is the total variable cost of production divided by the number of units produced, indicating the variable cost per unit.
- Understand the analysis of cost curves diagrams, encompassing total costs, average costs, and marginal costs.
Verified Answer
ZK
Zybrea KnightJun 02, 2024
Final Answer :
A
Explanation :
When marginal cost exceeds average total cost, it indicates that the cost of producing one more unit is higher than the average cost of production up to that point, leading to an increase in the average total cost.
Learning Objectives
- Understand the analysis of cost curves diagrams, encompassing total costs, average costs, and marginal costs.