Suppose a firm producing digital cameras is operating such that marginal costs are higher than average costs.If the firm produces one more camera,average costs will
A)rise.
B)fall.
C)reach a point of diminishing returns.
D)remain constant.
E)reach their maximum.

Question

Quizplus · Accepted Answer

When marginal costs are higher than average costs, it implies that the firm is operating at an inefficient level of production. As a result, if the firm produces one more camera, the additional cost of producing that camera will be more than the average cost of producing all cameras. Therefore, the average cost will rise.

Suppose a Firm Producing Digital Cameras Is Operating Such That