Suppose a firm producing digital cameras is operating such that marginal costs are higher than average costs. If the firm produces one more camera, average costs will
A) rise.
B) reach a point of diminishing returns.
C) fall.
D) reach their maximum.
E) remain constant.

Question

Quizplus · Accepted Answer

When marginal costs are higher than average costs, it means that each additional unit produced costs more than the previous unit on average. This will cause average costs to rise if the firm produces one more camera.

Suppose a Firm Producing Digital Cameras Is Operating Such That