When Average Total Cost Decreases

question 142

Multiple Choice

When average total cost decreases,

• A)marginal cost must be decreasing.
• B)marginal cost must be increasing.
• C)average variable cost must be decreasing.
• D)average variable cost must be increasing.
• E)marginal cost and average variable cost can be increasing or decreasing.

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Definitions:

Transaction Costs

The expenses incurred when buying or selling a good or service, which can include search, bargaining, and enforcement costs.

Marginal Social Benefit

The additional benefit to society resulting from one more unit of a good or service being produced and consumed.

Marginal Social Cost

The total cost society bears for the production of an additional unit of a good or service, including both external and private costs.

Coal Mine Pollution

Environmental contamination resulting from the operation of coal mines, including air and water pollution.