Which of the following is true about the relationship between Marginal cost and Average cost?Group of answer choicesMarginal cost should be rising when Average cost begins to rise.Average cost always rises when marginal cost rises.Marginal cost equals Average cost at the minimum point of Marginal cost.Marginal cost is always less than Average cost as a firm produces more.
Question
Which of the following is true about the relationship between Marginal cost and Average cost?Group of answer choicesMarginal cost should be rising when Average cost begins to rise.Average cost always rises when marginal cost rises.Marginal cost equals Average cost at the minimum point of Marginal cost.Marginal cost is always less than Average cost as a firm produces more.
Solution
The correct statement about the relationship between Marginal cost and Average cost is: "Marginal cost equals Average cost at the minimum point of Average cost."
Here's why:
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"Marginal cost should be rising when Average cost begins to rise." - This is not necessarily true. The marginal cost can rise before the average cost begins to rise.
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"Average cost always rises when marginal cost rises." - This is also not necessarily true. The average cost may continue to fall even if the marginal cost starts to rise, until the point where the marginal cost equals the average cost.
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"Marginal cost equals Average cost at the minimum point of Marginal cost." - This is incorrect. The marginal cost equals the average cost at the minimum point of the average cost, not the marginal cost.
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"Marginal cost is always less than Average cost as a firm produces more." - This is not necessarily true. The marginal cost can be more than the average cost if the cost of producing an additional unit is higher than the average cost of production.
Similar Questions
Which of the following is always true of the relationship between average and marginal costs? aAverage total costs are increasing when marginal costs are increasing. bMarginal costs are increasing when average variable costs are higher than marginal costs. cAverage variable costs are increasing when marginal costs are increasing. dAverage variable costs are increasing when marginal costs are higher than average variable costs.
When Marginal cost and Average cost falls,Group of answer choicesthey fall at the same speed.Marginal cost falls faster than Average Cost.they do not depend on output.Average cost falls faster than Marginal cost.
What is the relationship between a firm's average total cost and marginal cost curves?a. The marginal cost curve is always above the average total cost curve.b. The marginal cost curve is always below the average total cost curve.c. The marginal cost curve intersects the average total cost curve at its minimum point. d. The marginal cost curve intersects the average total cost curve at its maximum point.
Which of the following best describes the relationship between marginal cost (MC) and average total cost (ATC) when MC is less than ATC?Question 4Answera.MC is falling and is less than ATC.b.MC is falling and is greater than ATC.c.MC is rising and is more than ATC.d.MC is rising and is less than ATC.
How is marginal cost related to marginal product of labor? They are inversely related They are directly related They have no relation They are related through the average total cost
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