Marginal Cost Is Equal to Average Variable Cost

question 268

Multiple Choice

Marginal cost is equal to average variable cost

• A) when average variable cost is at its minimum value.
• B) when marginal cost is at its minimum value.
• C) when average variable cost is getting smaller.
• D) when average variable cost is getting larger.

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Definitions:

Returns to Scale

The rate at which output increases as inputs are proportionally increased, indicating either increasing, constant, or decreasing efficiency in production.

Long-Run Average Cost

The average cost per unit of output when all inputs, including capital, are variable, allowing for the adjustment of all factors in production to achieve the lowest cost.

Output

The quantity of goods or services produced in a given period of time.

Returns to Scale

The change in output resulting from a proportionate increase in all inputs (factors of production), where increasing, constant, and decreasing returns to scale can occur.