If an increase in output results in a decrease in average total cost, the corresponding marginal cost is:
A) less than average total cost.
B) greater than average total cost.
C) equal to average total cost.
D) negative.

Question

Quizplus · Accepted Answer

When average total cost is decreasing, marginal cost must be less than average total cost because marginal cost pulls the average down.

If an Increase in Output Results in a Decrease in Average