Average total cost of producing 100 units of output is $5. If the marginal cost of producing the 101st unit is $4, then average total cost of 101 units is less than $5.

Question

Quizplus · Accepted Answer

When the marginal cost of producing an additional unit (in this case, the 101st unit) is less than the current average total cost, producing that additional unit will lower the average total cost.

Average Total Cost of Producing 100 Units of Output Is