If average variable cost exceeds marginal cost, then: a) both the average variable and average...

Question:

If average variable cost exceeds marginal cost, then:

a) both the average variable and average total cost are decreasing.

b) the average variable cost is decreasing and the average total cost is increasing.

c) average variable cost is increasing and the average total cost is decreasing.

d the average variable cost is decreasing and the average total cost may be increasing or decreasing.

Types of Production Costs:

Average Total Cost (ATC) is the cost per unit of the commodity. It is given by the total of all production costs divided by the number of units produced. The Average Variable Cost (AVC) is the variable cost per unit. It is given by variable cost divided by output. The Marginal Cost (MC) is the cost of producing an additional unit of the commodity. It is given by a change in the total cost divided by a change in output.

Answer and Explanation: 1

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Answer: a) Both the average variable cost and average total cost are decreasing


Reason:

When the marginal cost (MC) decreases, the average...

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Product & Cost Curves: Definitions & Use in Production Possibility Curves

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Chapter 4 / Lesson 10
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Learn about product and cost curves. Explore examples of product and cost curve graphs, their purpose, and understand total product curves and total cost curves.


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