Asked by Lauren Walsh on Jul 28, 2024
Verified
Marginal cost is equal to average total cost when
A) average variable cost is falling.
B) average fixed cost is rising.
C) marginal cost is at its minimum.
D) average total cost is at its minimum.
Marginal Cost
The added expense incurred by creating one more 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.
Minimum
The lowest permissible limit or the least possible amount or degree of something.
- Evaluate the relationship involving marginal cost, average total cost, and the scale at which production is efficient.
Verified Answer
SM
Sarah MackenzieJul 29, 2024
Final Answer :
D
Explanation :
When marginal cost equals average total cost, it means that the cost of producing one more unit is exactly the same as the average cost of producing all units so far. This situation occurs at the minimum point of the average total cost curve, indicating that any additional unit produced will increase the average total cost.
Learning Objectives
- Evaluate the relationship involving marginal cost, average total cost, and the scale at which production is efficient.