When marginal cost exceeds average total cost,
A)average fixed cost must be rising.
B)average total cost must be rising.
C)average total cost must be falling.
D)marginal cost must be falling.

Question

Quizplus · Accepted Answer

When the marginal cost exceeds the average total cost, it means that the average total cost is increasing. This is because the marginal cost is the additional cost incurred by producing one more unit, and if this cost is higher than the average cost of producing all units up to that point (average total cost), it suggests that the cost of producing each additional unit is increasing. Therefore, the correct answer is B: average total cost must be rising.

When Marginal Cost Exceeds Average Total Cost