Explain how the value of marginal cost affects the values of average variable cost and average total cost and what this means for the relationship between the marginal cost curve and the average variable and total cost curves
What will be an ideal response?
So long as the value of marginal cost is less than the value of average variable (total) cost, an increase in output will cause average variable (total) cost to decrease. When marginal cost is greater than the value of average variable (total) cost, an increase in output will cause average variable (total) cost to increase. The result is that the the marginal cost curve will intersect the average variable and average total cost curves at their respective minimum points.
You might also like to view...
As the price of milk increases, what would reasonably be expected to happen to the equilibrium price and equilibrium quantity of cereal? (Milk and cereal are complements.)
A) Equilibrium price would increase and equilibrium quantity would decrease. B) Equilibrium price and quantity would both decrease. C) Equilibrium price would decrease and equilibrium quantity would increase. D) Equilibrium price and quantity would both increase.
Assume Brandon's benefit function for water is S(W) = ?W and he consumes water both in droughts, WD, or in the rainy season, WR. Assume his current consumption bundle is WD = 36 and WR = 25 and the probability of drought is 0.75. Brandon's risk premium is:
A. 66.31 units of water. B. 0.19 units of water. C. 33.16 units of water. D. 3.20 units of water.
When the economy is in macro equilibrium,
a. the sum of savings plus investment must equal the sum of imports plus exports. b. the sum of savings plus imports plus taxes must equal the sum of investment plus government purchases plus exports. c. the sum of savings plus government purchases must equal exports minus imports. d. the government's budget must be in balance.
Other things the same, if the government reduced its budget deficit, the country's trade balance would rise
a. True b. False Indicate whether the statement is true or false