If a firm's average total cost decreases as the firm increases its output, the firm's marginal cost must be

Question

BlackTom AI · Accepted Answer

Question restatement: If a firm's average total cost decreases as the firm increases its output, the firm's marginal cost must be which of the following?

Option 1: less than the average total cost
Reasoning: When ATC is falling as output rises, the marginal cost must be below ATC. This is because ATC is the average of all costs per unit, and a new unit produced at a cost lower than the current average pulls the average down. Therefore MC < ATC aligns with a decreasing ATC.

Option 2: negative
Reasoning: A negative marginal cost would mean total cost decreases with each additional unit produced. While ATC can fall when MC is below ATC, MC being negative is not a necessary or typical condition for ATC to fall. In most short-run analyses, MC is nonnegative once production begins, so this is not the required implication.

Option 3: greater than the average variable cost
Reasoning: MC being greater than AVC does not by itself determine whether ATC is rising or falling. ATC can fall while MC is below ATC; it can also be above AVC depending on the relative positions of AVC and AFC. This option does not capture the essential relationship between ATC and MC when ATC is decreasing.

Option 4: less than the average fixed cost
Reasoning: ATC = AVC + AFC. Since AFC falls as output increases, it is possible for MC to be less than ATC without being less than AFC. In fact, MC can be below ATC while still being above AFC or below AVC depending on the firm’s cost structure. This option misstates the direct relationship between MC and ATC.

Option 5: decreasing
Reasoning: Saying MC is decreasing would mean marginal cost itself falls as output increases, which would not directly explain why ATC is falling. The fall in ATC is driven by MC being below ATC, not by MC itself decreasing with quantity. The statement that MC is decreasing is not the necessary condition for ATC to decrease.

Summary: The correct conceptual link is that ATC decreases when MC < ATC. Among the options, "less than the average total cost" correctly captures this relationship, while the other statements misrepresent the necessary condition or describe unrelated aspects of cost behavior.

AP Economics-Hillebrand AP Microeconomics Sem 1 Exam 2025 - Requires Respondus LockDown Browser

If a firm's average total cost decreases as the firm increases its output, the firm's marginal cost must be

查看解析

登录即可查看完整答案

类似问题

When the average total cost curve is at its minimum, we know that the

In the short run, ATC curve and AVC curve converge as output increases because

When the average variable cost curve is upward sloping, the marginal cost curve:

When the average variable cost curve is upward sloping, the marginal cost curve:

If the marginal cost curve is U-shaped,

In the diagram, A represents a firm's ___ curve, B represents its _ curve, and C represents its ___ curve.

If a new tax on capital increases a firm’s fixed cost of production, which of the following will occur in the short run?

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单

AP Economics-Hillebrand AP Microeconomics Sem 1 Exam 2025 - Requires Respondus LockDown Browser

If a firm's average total cost decreases as the firm increases its output, the firm's marginal cost must be

查看解析

登录即可查看完整答案

类似问题

When the average total cost curve is at its minimum, we know that the

In the short run, ATC curve and AVC curve converge as output increases because

When the average variable cost curve is upward sloping, the marginal cost curve:

When the average variable cost curve is upward sloping, the marginal cost curve:

If the marginal cost curve is U-shaped,

In the diagram, A represents a firm's _____ curve, B represents its _____ curve, and C represents its _____ curve.

If a new tax on capital increases a firm’s fixed cost of production, which of the following will occur in the short run?

更多留学生实用工具

希望你的学习变得更简单

In the diagram, A represents a firm's ___ curve, B represents its _ curve, and C represents its ___ curve.