If the marginal cost of producing the fifth unit of output is higher than the marginal cost of producing the fourth unit of output, then at five units of output, average total cost must be rising.

Question

Quizplus · Accepted Answer

The average total cost (ATC) could be falling if the marginal cost (MC) of the fifth unit is less than the ATC prior to producing the fifth unit, even if it's higher than the MC of the fourth unit. The ATC considers all units produced, not just the marginal comparison between two consecutive units.

If the Marginal Cost of Producing the Fifth Unit of Output