Whenever marginal cost is greater than average total cost,
A)average total cost is rising.
B)marginal cost is falling.
C)average total cost is falling.
D)Both b and c are correct.

Question

Quizplus · Accepted Answer

When marginal cost is greater than average total cost, it means that the cost of producing an additional unit is higher than the average cost of producing all units up to that point. This indicates that the average cost is rising, as the additional cost of producing an extra unit is pulling up the average cost. Therefore, choice A is correct. Choice B is incorrect because if marginal cost is rising, it means that the cost of producing an additional unit is increasing, not decreasing. Choice C is also incorrect because if average total cost is falling, it means that the cost of producing each unit is decreasing, which is the opposite of the situation described in the question.

Whenever Marginal Cost Is Greater Than Average Total Cost