The cost function C(y)= 10 + 3y has marginal cost less than average cost for all levels of output.

Name: The cost function C(y)= 10 + 3y has marginal cost less than average cost for all levels of output.
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Question

Quizplus · Accepted Answer

Marginal cost is the derivative of the cost function, which is 3. Average cost is total cost divided by output, which is (10 + 3y)/y. For all levels of output, 3 < (10 + 3y)/y, so marginal cost is less than average cost.

The Cost Function C(y)= 10 + 3y Has Marginal Cost