Total cost is $20 at 4 units of output and $36 at 6 units of output.Between 4 and 6 units of output,marginal cost
A)is less than average total cost.
B)is equal to average total cost.
C)is equal to average variable cost.
D)is greater than average total cost.
E)equals average fixed cost.

Question

Quizplus · Accepted Answer

To calculate the marginal cost between 4 and 6 units of output, we need to calculate the change in total cost and change in output.
Change in total cost = $36 - $20 = $16
Change in output = 6 - 4 = 2
Marginal cost = Change in total cost / Change in output = $16 / 2 = $8

Now, we need to compare this marginal cost with the average total cost (ATC) between 4 and 6 units of output. To calculate the ATC, we need to divide the total cost by the output.
ATC at 4 units of output = $20 / 4 = $5
ATC at 6 units of output = $36 / 6 = $6

Average total cost is increasing between 4 and 6 units of output, which means the marginal cost will be greater than the average total cost. Therefore, the correct answer is D) is greater than average total cost.

Total Cost Is $20 at 4 Units of Output and $36