Consider the following statements when answering this question: I. A firm's marginal cost curve does not depend on the level of fixed costs.
II) As output increases the difference between a firm's average total cost and average variable cost curves cannot rise.
A) I is true, and II is false.
B) I is false, and II is true.
C) I and II are both true.
D) I and II are both false.

Question

Quizplus · Accepted Answer

I is true because marginal cost is the change in total cost resulting from a one-unit increase in output, and fixed costs do not change with output. II is true because as output increases, average variable cost decreases, and average total cost approaches average variable cost.

Consider the Following Statements When Answering This Question: I