a. average fixedcosts will also be increasing. b. average variablecosts must be

Question

           a.         average fixedcosts will also be increasing.

           b.         average variablecosts must be decreasing.

           c.         marginal costmust be greater than average total cost.

           a.         Buyers do notwish to buy as much as sellers want to sell.

           b.         Some buyers willattempt to outbid other buyers for the available units ofoutput.

           c.         Higher priceswill induce sellers to reduce their production.

           d.         All theabove.

Explanation / Answer

No, d is not correct for the first question (and you'resupposed to ask only one question per post). . Note that average fixed costs are always falling. FixedCosts, by definition, do not change as you change the amount ofoutput q. Average Fixed Costs are TFC/q. Since TFC isfixed, TFC/q is always falling as q increases. . That knocks out options a and d; I'll let you judge between band c.

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