Part 1The graph shows the average variable cost curve and average total cost curve for a firm that produces candles. Draw the firm's marginal cost curve. Label it. Click toenlargegraph Part 1What happens over the output range for which marginal cost exceeds average variable cost but is less than average total cost? A. Average fixed cost is falling more quickly than average variable cost is rising. B. Both average variable cost and average total cost are rising. C. Average fixed cost is falling more slowly than average variable cost is rising. D. Average fixed cost is rising while average variable cost is falling. Part 1
051015202530012345Output (candles per day)Cost (dollars per candle)AVCAVCATCATC MCMC Edit coordinates interactive graph Draw only the objects specified in the question.

Question

Part 1The graph shows the average variable cost curve and average total cost curve for a firm that produces candles. Draw the​ firm's marginal cost curve. Label it. Click toenlargegraph Part 1What happens over the output range for which marginal cost exceeds average variable cost but is less than average total​ cost? A. Average fixed cost is falling more quickly than average variable cost is rising. B. Both average variable cost and average total cost are rising. C. Average fixed cost is falling more slowly than average variable cost is rising. D. Average fixed cost is rising while average variable cost is falling. Part 1
051015202530012345Output (candles per day)Cost (dollars per candle)AVCAVCATCATC MCMC Edit coordinates interactive graph​>>> Draw only the objects specified in the question.

BlackTom AI · Accepted Answer

Restating the question and options helps frame the scenario. The question asks about the behavior of average fixed cost (AFC), average variable cost (AVC), and average total cost (ATC) in the output range where MC is greater than AVC but less than ATC. The answer choices describe how AFC and AVC/ATC interact in that region.
Option A: 'Average fixed cost is falling more quickly than average variable cost is rising.' This statement aligns with the intuition from cost curves: when MC is between AVC and ATC, ATC is rising but AVC may be increasing while AFC is decreasing. Since AFC falls as output increases (AFC = TC - VC divided by output), and AVC can be increasing or decreasing depending on the exact position of MC relative to AVC, the key idea is that AFC is falling and the rate at which AFC falls can dominate the behavior in that interval, causing AFC to decrease faster than AVC increases. This option captures the relative speeds of change between AFC and AVC in the given region and is consistent with typical cost-curve relationships.
Option B: 'Both average variable cost and average total cost are rising.' If MC is between AVC and ATC, ATC is indeed rising, but AVC may be rising or falling depending on the location relative to its own MC. Saying both AVC and ATC are rising is too absolute and ignores that AVC could be flat or even falling in parts of the interval. This makes B unlikely since it overstates the behavior of AVC.
Option C: 'Average fixed cost is falling more slowly than average variable cost is rising.' This would imply AVC is rising and AFC is falling but at a slower rate than AVC’s rise. However, in the typical region where MC is between AVC and ATC, AFC tends to be falling, and the comparison of speeds is not typically characterized as AFC falling more slowly than AVC rising. The phrasing here contradicts the more common interpretation in which AFC decreases relatively quickly as output expands, making this option inconsistent with standard cost-curve logic.
Option D: 'Average fixed cost is rising while average variable cost is falling.' This cannot be correct in the given region, since AFC always falls as output increases (AFC = AFC at zero slope downward regardless of price) and MC between AVC and ATC does not imply AVC is falling while AFC rises. This combination contradicts the fundamental property that AFC declines with higher output, not rises.
In summary, Option A best matches the standard interpretation of cost-curve behavior in the MC between AVC and ATC region, while B, C, and D misstate the typical relationships among AFC, AVC, and ATC in that interval. The nuances in each incorrect choice illustrate common misunderstandings about how fixed and variable costs respond to changes in output, and how MC relates to the average cost curves.

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Homework:ch11_qz3

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