Consider the short-run costs of a firm.Suppose the firm's total fixed costs are $100 and average variable costs are constant regardless of output.Which of the following is then true?
A)Marginal cost will equal average total cost.
B)Average total cost will decrease when output is increased.
C)Marginal cost will be less than average variable cost.
D)Average total costs will be constant.
E)Marginal cost will be rising as output rises.

Question

Quizplus · Accepted Answer

Average total cost decreases as output increases because fixed costs are spread over more units, while average variable costs remain constant.

Consider the Short-Run Costs of a Firm