If Marginal Cost Is Below Average Total Cost, Then Average

question 488

Multiple Choice

If marginal cost is below average total cost, then average total cost

• A)is constant.
• B)is falling.
• C)is rising.
• D)may rise or fall depending on the size of fixed costs.

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Definitions:

Health Insurance Company

An organization that provides coverage for medical expenses in exchange for premium payments.

Minimize Adverse Selection

A strategy to reduce the likelihood of selecting undesirable alternatives or participants, often used in insurance and finance to prevent situations where the insurer or lender has less information than the applicant.

Screening

The process of evaluating or analyzing something for a specific purpose or quality.

Adverse Selection

A situation where asymmetric information leads to the selection of undesirable participants in transactions, often seen in insurance markets.