Figure 14.3.1
-Refer to Figure 14.3.1 above. Which of the following statements is consistent with the relationship between average and marginal expenditure?
A) The decision to sell an extra unit raises the price that can be obtained for all units, not just for the last one.
B) The decision to buy an extra unit raises the price that must be paid for all units, not just for the last one.
C) The price that must be paid is the same for all units purchased.
D) The price that can be obtained is the same for all units sold.

Question

Figure 14.3.1
-Refer to Figure 14.3.1 above. Which of the following statements is consistent with the relationship between average and marginal expenditure?
A) The decision to sell an extra unit raises the price that can be obtained for all units, not just for the last one. 
B) The decision to buy an extra unit raises the price that must be paid for all units, not just for the last one. 
C) The price that must be paid is the same for all units purchased. 
D) The price that can be obtained is the same for all units sold.

Quizplus · Accepted Answer

The relationship between average and marginal expenditure is represented by the slope of the average expenditure curve. If the marginal expenditure is greater than the average expenditure, the average expenditure curve will be increasing, indicating that the decision to buy an extra unit raises the price that must be paid for all units, not just for the last one. Therefore, option B is the correct answer. Option A is incorrect because it implies that selling an extra unit raises the price that can be obtained for all units, which is not necessarily true. Option C is incorrect because it implies that the price that must be paid for all units is the same, which is not necessarily true. Option D is incorrect because it implies that the price that can be obtained for all units sold is the same, which is not necessarily true.

Figure 14.3.1 -Refer to Figure 14.3.1 Above. Which of the Following Statements