If the average cost of producing 10 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.25, the average cost of producing 10 sweaters will be:
A) $6.50.
B) more than $6.50.
C) less than $6.50.
D) exactly $6.25.

Question

Quizplus · Accepted Answer

The marginal cost of the tenth sweater ($6.25) is less than the average cost of producing 10 sweaters ($6.50), which means the average cost will decrease when the tenth sweater is produced.

If the Average Cost of Producing 10 Sweaters Is $6