When Peter's Pizza Company produces 50 pizzas, its average total cost is $8 . The marginal cost of the 51st pizza is $7 . If the firm chooses to produce the 51st pizza, what will happen to average total cost? Explain
What will be an ideal response?
If the firm decides to produce the 51st pizza, its average total cost will fall because the marginal cost is lower than the average total cost.
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a. The expenditure line will shift downward. b. The expenditure line will shift upward. c. There will be movement to the left on the expenditure line. d. There will be movement to the right on the expenditure line.
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