The following relationship must hold between the average total cost (ATC)curve and the marginal cost curve (MC):
A)If MC is rising, ATC must be rising.
B)If MC is rising, ATC must be greater than MC.
C)If MC is rising, ATC must be less than MC.
D)If ATC is rising, MC must be greater than ATC.
E)If ATC is rising, MC must be less than ATC.

Question

Quizplus · Accepted Answer

When the average total cost (ATC) is rising, it means that the marginal cost (MC), which is the cost of producing one more unit, is higher than the ATC. This is because the MC pulls the ATC in its direction; if MC is above ATC, it pulls the ATC up, causing it to rise.

The Following Relationship Must Hold Between the Average Total Cost