If the average cost of producing 10 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.75, the average cost of producing 10 sweaters will be:
A) $6.50.
B) more than $6.50.
C) less than $6.50.
D) exactly $6.75.

Question

Quizplus · Accepted Answer

The marginal cost of the tenth sweater ($6.75) is higher than the average cost of the first nine sweaters, which means the average cost will increase when the tenth sweater is included.

If the Average Cost of Producing 10 Sweaters Is $6