If Marginal Cost Is Greater Than Average Total Cost, Then

question 428

Multiple Choice

If marginal cost is greater than average total cost, then

• A)profits are increasing.
• B)economies of scale are becoming greater.
• C)average total cost remains constant.
• D)average total cost is increasing.

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Definitions:

Total Surplus

The sum of consumer surplus and producer surplus, representing the total net benefit to society from producing and consuming a good or service.

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount they actually pay.

Producer Surplus

The gap between the price producers are ready to take for offering a product or service and the actual payment they receive.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, representing the benefit consumers receive.