Suppose marginal cost is $5.Average variable costs are $10.For the next unit of output produced,average variable costs will be

Question

Quizplus · Accepted Answer

If marginal cost is less than average variable cost, then the next unit of output will decrease the average variable cost. In this case, if marginal cost is $5 and the current average variable cost is $10, producing one more unit at a lower cost will bring the average variable cost down. Therefore, the answer is A, less than $10.

Suppose Marginal Cost Is $5