Asked by Ana Bel Montes on May 14, 2024
Verified
If the short-run average variable costs of production for a firm are rising, then this indicates that
A) average total costs are at a maximum.
B) average fixed costs are constant.
C) marginal costs are above average variable costs.
D) average variable costs are below average fixed costs.
Marginal Costs
The increase in total cost that arises from an extra unit of production.
Average Variable Costs
The total variable costs (costs that change with output level) divided by the quantity of output produced.
Average Total Costs
The total cost of production divided by the number of units produced, indicating the cost per unit.
- Develop an understanding and distinguish the ideas of diminishing marginal returns and marginal cost.
- Develop an understanding of the diagrams indicative of cost curves; this encompasses total costs, average costs, and marginal costs.
Verified Answer
YC
Yolanda CrosbyMay 17, 2024
Final Answer :
C
Explanation :
When the short-run average variable costs (AVC) of production for a firm are rising, it typically indicates that marginal costs (MC) are above the AVC. This is because the marginal cost curve intersects the average variable cost curve at its minimum point. When MC is above AVC, it pulls the average up, indicating that each additional unit of output is more expensive to produce than the units before, thus causing the AVC to rise.
Learning Objectives
- Develop an understanding and distinguish the ideas of diminishing marginal returns and marginal cost.
- Develop an understanding of the diagrams indicative of cost curves; this encompasses total costs, average costs, and marginal costs.