Scenario 7.1:
The average total cost to produce 100 cookies is $0.25 per cookie. The marginal cost is constant at $0.10 for all cookies produced.
-Refer to Scenario 7.1. For 100 cookies, the average total cost is:
A) falling.
B) rising.
C) neither rising nor falling.
D) less than average fixed cost.

Question

Quizplus · Accepted Answer

Since the marginal cost is less than the average total cost, producing additional cookies should lower the average total cost. Therefore, the average total cost for 100 cookies is falling.

Scenario 7.1: The Average Total Cost to Produce 100 Cookies Is $0.25