Asked by Kolya Ptashenko on Jul 26, 2024
Verified
If marginal cost is GREATER than average total cost,then average total cost is:
A) at its maximum.
B) at its minimum.
C) rising.
D) falling.
Marginal Cost
The cost of producing an additional unit of a good or service.
Average Total Cost
The total cost of production (fixed plus variable costs) divided by the total quantity produced, representing the per-unit cost of production.
- Gain an understanding of the notion of marginal cost and how it correlates with average costs.
Verified Answer
TD
Taylor DoukasJul 30, 2024
Final Answer :
C
Explanation :
When marginal cost is greater than average total cost, it means that each additional unit produced is adding more to the total cost than the average of all units produced so far. This implies that the average total cost must be rising as additional units are produced, making choice C the correct answer.
Learning Objectives
- Gain an understanding of the notion of marginal cost and how it correlates with average costs.