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:

Competitive Price-Taker Firm

A business that accepts market prices as given because it has no power to influence them.

Economic Profit

The difference between the total revenue received from the sale of an output and the total opportunity costs of the inputs used.

Economic Losses

Monetary losses incurred from business operations or other economic activities, often delineated from accounting losses.

Positive Profit

A financial gain that occurs when the revenues earned exceed the costs incurred.