Which average cost function corresponds to the total cost function shown in the following figure?

Question

Quizplus · Accepted Answer

The average cost function is calculated by dividing the total cost by the quantity of output produced. The graph shows the total cost function crossing the x-axis at around 5 units of output. At this point, the total cost is around $18. The slope of the total cost curve starts off steep but gradually flattens out as output increases, suggesting decreasing marginal cost. The only average cost function that matches this description is option B, which starts off high but decreases as output increases. The other options either do not cross the x-axis at the same point as the total cost function or do not have the same shape as the total cost function.

Which Average Cost Function Corresponds to the Total Cost Function