Question

If marginal cost is less than average total cost, are average total costs rising or falling? Alternatively, if marginal cost is more than average total cost, are average total costs rising or falling? Explain how this example might apply to a basketball player attempting to achieve a high average points per game.

Answer 1

if the marginal cost is decreasing than the average total cost will be reducing as the additional cost is less than that of before and similarly with the marginal cost is increasing then the average total cost will also increase because the additional cost to produce one extra item is also more.

This example might apply to a basketball player on achieving high average points per game where per each game he has to increase the number of points to score as a result of which the marginal points achieved will increase and this can increase the average points per game