Determine if the statements below regarding costs are true or false and drag the
ID: 1221999 • Letter: D
Question
Determine if the statements below regarding costs are true or false and drag them into the proper bin. ATC is rising when MC is below ATC. ATC = (FC + VC)/Q The ATC is increasing the MC is increasing. MC refers to the change in total cost associated with the production of another unit. The VC curve is modeled as a horizontal line. All costs are either fixed or variable. TC = FC + VC + MC The ATC is always greater than or equal to AVC. Average fixed cost is always higher than average variable cost. When fixed costs are positive, the average fixed cost curve is downward sloping. The ATC crosses the MC at the lowest point on the MC.Explanation / Answer
ATC is rising when MC is below ATC-False, ATC fallls when MC is below ATC and rises when MC is above ATC
ATC=(FC+VC)/Q- True, -FC+VC is total cost and total cost divided by Q is ATC
The ATC is increasing whenever MC is increasing-FALSE, This might not be the case as there are points when MC increases after reaching the minimum point before cutting the minimum point of ATC
MC refers to the change in Total cost associated with the production of another unit-True, MC is the change in Total Cost for a unit increse in the production of output.
The VC is modeled as a horizontal line-false, the horizontal line is the fixed cost. Variable Cost is U shaped curve
All costs are either fixed or variable-true
TC=FC+VC+MC-False, TC=FC+VC and Not MC
The ATC is always greater than or equal to AVC-True, ATC is equal to AVC and AFC and thus ATC will always be greater
Average Fixed Cost is always higher than Average Variable Cost-False, this is not necessary as there are cases when Average Variable cost are higher than Average Fixed Cost
When Fixed Cost are Positive, the average fixed cost are downward sloping- True, As the units of output increases, the Average Fixed Cost decreases.
The ATC crosses the MC at the lowest point of the MC-False, The MC crosses the ATC at the lowest point of ATC.
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