Figure 13-8 Cost MC ATC AVC A BC Quaxtity Refer to Figure 13-8. Which of the fol

Question

Figure 13-8 Cost MC ATC AVC A BC Quaxtity Refer to Figure 13-8. Which of the following statements is correct? Select one: O a. Marginal cost is rising for quantities higher than D because marginal cost is higher than average total cost. O b. Average variable cost is declining for quantities less than B because marginal cost is lower than average variable cost. C. Marginal cost is minimized at B because at that quantity, marginal cost equals average variable cost. O d. All of the above are correct

Explanation / Answer

(1)

A is incorrect because MC is rising since A which is its minimum point.

B. Correct AVC is declining until B also the marginal cost is lower than aveage variable cost.

C incorrect MC is minimized at A.

Thus the corret option is (b)

(2)

TC of fourth unit: = 64(Variable Cost)+10(fixed cost) = 74

TC of third unit = $70

Therefore MC of the fourth unit = $74-$70. = $4

The correct option (a).

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