Figure 7.2.1
-Refer to Figure 7.2.1 above. At what level of output is average total cost closest to marginal cost?
A) 2 units of output
B) 7 units of output
C) 8 units of output
D) 10 units of output

Question

Figure 7.2.1
-Refer to Figure 7.2.1 above. At what level of output is average total cost closest to marginal cost?
A) 2 units of output 
B) 7 units of output 
C) 8 units of output 
D) 10 units of output

Quizplus · Accepted Answer

At 8 units of output, average total cost (ATC) is closest to marginal cost (MC). At this level of output, the distance between ATC and MC is the smallest. This is because MC intersects ATC at its lowest point, which is the efficient scale of production. Therefore, producing 8 units of output would minimize costs and maximize profits.

Figure 7.2.1 -Refer to Figure 7.2.1 Above. at What Level of Output