If MC Is Greater Than ATC, We Know That

question 96

Multiple Choice

If MC is greater than ATC, we know that:

• A) ATC must be rising.
• B) AVC must be falling.
• C) ATC must be falling.
• D) ATC could be rising or falling.

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Definitions:

Rental Price

The cost paid periodically by a lessee to use the assets of another entity.

Marginal Product

The additional output that is produced by using one more unit of a factor of production, all other inputs remaining constant.

Profit

Total revenue minus total cost.

Diminishing Marginal Product

The principle that as more of a variable input is added to a fixed input, the additional output produced from each new unit of input will eventually decrease.