If average cost is constant for all levels of output:
A)the marginal cost curve will intersect the average cost at a single point, the minimum of average cost.
B)marginal cost will be equal to average cost for all levels of output.
C)marginal cost will be above average cost when average cost is increasing and marginal cost will be below average cost when average cost is decreasing.
D)marginal cost will have a region of diminishing marginal cost.

Question

Quizplus · Accepted Answer

When average cost is constant for all levels of output, it means that the cost of producing one more unit (marginal cost) is exactly the same as the average cost of production at all levels of output. This is because any change in the marginal cost would alter the average cost, contradicting the premise that the average cost is constant.

If Average Cost Is Constant for All Levels of Output