When marginal cost is rising, the average total costs:
A) could be rising or falling.
B) must be rising.
C) must be falling.
D) must be constant.

Question

Quizplus · Accepted Answer

When marginal cost is rising, it means that the cost of producing one additional unit of output is increasing. This can lead to an increase in average total costs if the additional unit has a higher cost than the previous units. However, it is also possible for the previous units to have been produced at a lower cost, leading to a decrease in average total costs despite the rising marginal cost. Therefore, the average total costs could be rising or falling when marginal cost is rising, depending on the specific circumstances.

When Marginal Cost Is Rising, the Average Total Costs