Average total cost of producing 100 units of output is $5. If the marginal cost of producing the 101st unit is $6, then average total cost of 101 units is less than $5.

Question

Quizplus · Accepted Answer

When the marginal cost of producing an additional unit (in this case, the 101st unit) is higher than the current average total cost, the average total cost will increase, not decrease.

Average Total Cost of Producing 100 Units of Output Is