Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 13 - Part V - The Costs of Production - Quick Check Multiple Choice - Page 276: 4

Answer

c

Work Step by Step

The firm is producing 20 units with an average total cost of \$25 and a marginal coast of \$15 if the firm increases its production to $21 units, the average total cost would decrease. The reason is the MC curve cuts the ATC curve from below. It means that ATC will fall till it equates MC. Therefore the correct option is C.
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