If an Increase in Output Results in a DECREASE in Average

question 112

Multiple Choice

If an increase in output results in a DECREASE in average total cost,the corresponding marginal cost is:

• A)less than average total cost.
• B)greater than average total cost.
• C)equal to average total cost.
• D)negative.

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Definitions:

Utility Function

A mathematical representation of how a consumer ranks different bundles of goods such that the higher the function's value, the higher the level of satisfaction.

Price Increase

A situation where the cost of goods or services rises over a period.

Loss of Income

A reduction or complete stoppage of earnings that an individual or entity faces due to various factors like unemployment, disability, or business interruption.

Cigars

Typically a tightly rolled bundle of dried and fermented tobacco that is smoked, considered a luxury good in many cultures.