If Average Cost Is Decreasing

question 97

Multiple Choice

If average cost is decreasing,

• A) marginal cost equals average cost.
• B) marginal cost exceeds average cost.
• C) marginal cost is less than average cost.
• D) Not enough information is given.

Understand the concept of average total cost.

Identify how different costs behave as production levels change in the short run.

Apply basic mathematical operations to solve for costs in short-run production scenarios.

Interpret graphical or tabulated data related to production costs.

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Definitions:

Sole Ownership

Legal status where a single individual or entity retains exclusive ownership and control over property or a business.

Average Revenue

The amount of income generated per unit of sale or average price at which a product is sold.

Demand Curve

An illustrated chart depicting the correlation between a good or service's price and the amount consumers want to buy during a certain period.

Marginal Revenue

The additional income that a firm receives from selling one more unit of a good or service.