If Marginal Cost Is GREATER Than Average Total Cost

question 191

Multiple Choice

If marginal cost is GREATER than average total cost:

• A)average total cost is increasing.
• B)average total cost is decreasing.
• C)average total cost is unchanged.
• D)marginal cost is decreasing.

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Definitions:

Fixed Maintenance

Scheduled or routine maintenance activities that incur costs regardless of the operational status of equipment.

Relevant Range

The range of activity within which the assumptions about variable and fixed cost behaviors hold true.

Variable Cost

Costs that change in proportion to the level of output or activity in a business operation.

Total Variable Cost

The total of all costs that vary with changes in the production level or sales volume, such as raw materials, direct labor, and variable overhead.