Which of the Following Statements Is True Regarding the Relationship

question 17

Multiple Choice

Which of the following statements is true regarding the relationship between average and marginal cost functions?

• A)When average cost is a decreasing function of output,marginal cost is greater than average cost.
• B)When average cost neither increases or decreases (because it is constant or at a minimum point),marginal cost is equal to average cost
• C)The average cost function is always smaller than the marginal cost function
• D)The average cost function is always greater than the marginal cost function
• E)When average cost is an increasing function of output,marginal cost is less than average cost

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Definitions:

Incomplete

Characterizing something as not fully finished, lacking some parts, or not comprehensive.

Transitive

A relation is described as transitive if, whenever it relates some A to B and B to C, it also relates A to C.

Marginal Rate of Substitution

The rate at which a consumer is willing to give up one good in exchange for another good while maintaining the same level of utility or satisfaction.

Perfect Substitutes

Two goods for which consumers are completely indifferent as to which to consume, meaning the consumption of one good can fully replace consumption of the other.