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Which of the following statements is correct? rev: 06_26_2018 Multiple Choice The marginal cost curve intersects...

Which of the following statements is correct?

rev: 06_26_2018

Multiple Choice

  • The marginal cost curve intersects the average variable cost curve at its lowest point.

  • If average variable cost is increasing, then average total cost must be increasing too.

  • The marginal cost curve intersects the average variable cost curve at a level of output greater than where the marginal cost curve intersects the average total cost curve.

  • Marginal cost is the change in the average fixed cost associated with a change in output of one unit.

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Homework Answers

Answer #1

The marginal cost curve intersects the average variable cost curve at its lowest point. : TRUE

(When MC is above AVC, MC is pushing the average up; therefore MC and AVC intersect at the lowest AVC.)

If average variable cost is increasing, then average total cost must be increasing too. : TRUE

( ATC = AFC + AVC )

The marginal cost curve intersects the average variable cost curve at a level of output greater than where the marginal cost curve intersects the average total cost curve. : FALSE ( The opposite happens because AVC is lower than ATC )

Marginal cost is the change in the average fixed cost associated with a change in output of one unit.: FALSE ( It is change in change in Total Cost )

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