If Marginal Cost Is Less Than Average Total Cost, Then

question 50

Multiple Choice

If marginal cost is less than average total cost, then:

• A) average total cost is increasing.
• B) average total cost is decreasing.
• C) marginal cost is necessarily increasing.
• D) marginal cost is necessarily decreasing.

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Definitions:

Public Good

A product or service that is non-excludable and non-rivalrous, meaning its consumption by one individual does not reduce its availability to others.

Collective Willingness

The aggregated preference or desire of a group of individuals to support or buy into a particular idea, policy, or product.

Marginal Cost

The boost in complete costs associated with creating one more unit of a product or service.

Private Good

A product that is excludable and rival in consumption, meaning its use is limited to the purchaser and it cannot be shared without diminishing availability to others.