Question

# If average total cost (ATC) curve is always downward sloping, then A. marginal cost will cross...

If average total cost (ATC) curve is always downward sloping, then

• A. marginal cost will cross ATC at its minimum
• B. average variable cost will cross ATC at its minimum
• C. the firm has economies of scale
• D. average fixed cost will cross ATC at its minimum

Given a U-shaped Average Total Cost (ATC) curve

• A. Average Fixed costs will always be above ATC
• B. Marginal cost will always be below ATC
• C. Average variable costs will always be below ATC
• D. Marginal cost will always be above ATC

The total revenue curve

• A. Will be a straight line from the origin for a single- price monopolist; but first increase, reach a maximum, then decrease for a perfectly competitive firm.
• B. Will first increase, reach a maximum, then decrease for both perfectly competitive a single- price monopolist firms.
• C. Will be a straight line from the origin for both perfectly competitive and single- price monopolist firms.
• D. Will be a straight line from the origin for a perfectly competitive firm; but first increase, reach a maximum, then decrease for a single- price monopolist

If the average total cost is always falling, this means as production increases costs fall.

The correct option is therefore

C. The firm has economies of scale.

2. When the average total cost curve is u shaped, the average variable cost will always be below the average cost curve because average variable cost is a subpart of the average total cost.

Hence the correct option is

C. Average variable cost will always be below ATC.

3. Will be a straight line from the origin for a perfectly competitive firm; but first increase, reach a maximum, then decrease for a single- price monopolist.