A firm's average total cost is minimized when it produces 10 units. When it produces 10 units, the average total cost is $5/unit. What is the marginal cost when the firm produces 10 units?
A) less than $5/unit
B) greater than $5/unit
C) $5/unit
D) $10/unit

Question

Quizplus · Accepted Answer

When a firm's average total cost is minimized, it is at the point where marginal cost equals average total cost. Therefore, when the firm produces 10 units at an average total cost of $5/unit, the marginal cost must also be equal to $5/unit. Thus, the answer is C.

A Firm's Average Total Cost Is Minimized When It Produces