Use the following to answer question:
-(Table: Cost Data)Use Table: Cost Data.When the purse factory produces 5 units of output (purses):
A)marginal cost is above average total cost,and average total cost is rising.
B)average total cost is above average variable cost,and average variable cost is falling.
C)marginal cost is below average variable cost,and average variable cost is falling.
D)marginal cost is above average variable cost and below average total cost,and average total cost is rising.

Question

Use the following to answer question: 
-(Table: Cost Data)Use Table: Cost Data.When the purse factory produces 5 units of output (purses):
A)marginal cost is above average total cost,and average total cost is rising. 
B)average total cost is above average variable cost,and average variable cost is falling. 
C)marginal cost is below average variable cost,and average variable cost is falling. 
D)marginal cost is above average variable cost and below average total cost,and average total cost is rising.

Quizplus · Accepted Answer

When marginal cost is above average total cost, it indicates that average total cost is rising. This is because the additional cost of producing one more unit (marginal cost) is higher than the current average, pulling the average up.

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