When a firm increased its output by one unit,its AC rose from $45 to $50.This implies that its MC is
A)$5.
B)between $45 and $50.
C)greater than $50.
D)Cannot be determined from the above information

Question

Quizplus · Accepted Answer

Since the average cost (AC) increased when output increased by one unit, it implies that the marginal cost (MC) of producing that additional unit was higher than the previous average cost. If the MC were less than or equal to $50, it would not have caused the AC to increase. Therefore, the MC must be greater than $50.

When a Firm Increased Its Output by One Unit,its AC