If the marginal cost of the 10th unit of output is $15 and the average total cost of the 10th unit of output is $15,
A) average total cost is minimized at 10 units of output.
B) average total cost is decreasing at 10 units of output.
C) average total cost is increasing at 10 units of output.
D) average total cost is maximized at 10 units of output.

Question

Quizplus · Accepted Answer

When the marginal cost of the 10th unit of output is equal to the average total cost of the 10th unit of output, it implies that the average total cost is not changing at that level of output. Therefore, any level of output above or below 10 units would result in a change in average total cost. Hence, average total cost is minimized at 10 units of output.

If the Marginal Cost of the 10th Unit of Output