At 130,000 units of output, a firm's marginal cost and average total cost are both $0.75.We can conclude that at this quantity of output the firm's average total cost curve is:
A) upward-sloping.
B) downward-sloping.
C) vertical.
D) horizontal.

Question

Quizplus · Accepted Answer

At 130,000 units of output, the marginal cost and average total cost are equal to $0.75. Since marginal cost intersects average total cost at its lowest point, we can conclude that the average total cost curve is flat, or horizontal, at this quantity of output. Therefore, the correct answer is D.

At 130,000 Units of Output, a Firm's Marginal Cost and Average