If average cost is increasing with an additional unit of output, this means that
A) marginal cost is increasing.
B) marginal cost is decreasing.
C) marginal cost is flat.
D) total cost is decreasing.

Question

Quizplus · Accepted Answer

When average cost increases with an additional unit of output, it means the cost of producing one more unit (marginal cost) is higher than the previous units' average cost, thus pulling the average cost up.

If Average Cost Is Increasing with an Additional Unit of Output