Question

Fill in the correct option within each set of brackets; indicate your selection by underlining the words you choose:

For any quantity of production for which marginal cost is less than average total cost, average total cost must be {rising, falling}, and similarly if marginal cost is greater than average total cost, ATC must be {rising, falling}. Marginal cost cuts through the average total cost function at ATC’s {minimum, maximum} point. The relationship similar between marginal cost and {average fixed, average variable} cost.

Answer 1

Part A For any quantity of production for which marginal cost is less than average total cost, average total cost must be falling .

Part B)  if marginal cost is greater than average total cost, ATC must be rising.

Part C) Marginal cost cuts through the average total cost function at ATC’s minimum point from the below.

This can be explained with the help of table.

Output	TC	FC	VC	AFC	AVC	AC	MC
0	10	10	0	-	0	-	-
1	20	10	10	10	10	20	10
2	28	10	18	5	9	14	8
3	34	10	24	3.3	8	11.3	6
4	38	10	28	2.5	7	9.5	4
5	42	10	32	2	6.4	8.4	4
6	48	10	38	1.7	6.3	8	6
7	56	10	46	1.4	6.6	8	8
8	72	10	62	1.2	7.8	9	16