At 50 units of output, a firm's average variable cost is $30.Therefore, its:
A) average total cost is $30.
B) average total cost is greater than $30.
C) average total cost is less than $30.
D) marginal cost is $30.

Question

Quizplus · Accepted Answer

Average total cost includes both average variable cost and average fixed cost. Since average variable cost is $30 at 50 units of output, and average fixed cost is always a positive number, the average total cost must be greater than $30.

At 50 Units of Output, a Firm's Average Variable Cost