If average total cost is declining then. When average total cost is declining then: a) marginal cost must be less than average cost 2022-12-11

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if average total cost is declining, it means that the cost of producing each unit of a good or service is decreasing as the firm increases its output. This is a desirable situation for firms, as it means they can potentially increase their profits by producing and selling more units at a lower cost.

There are several reasons why average total cost may be declining. One reason is economies of scale, which refer to the cost advantages a firm experiences as it increases its production. As a firm increases its production, it may be able to purchase inputs at a lower cost due to bulk discounts, or it may be able to spread fixed costs over a larger number of units, leading to lower average costs. For example, a car manufacturer may be able to negotiate lower prices for steel and other materials when it orders large quantities, or it may be able to spread the cost of its factory and equipment over a larger number of cars produced.

Another reason why average total cost may be declining is technological improvements. As a firm adopts new technologies or processes, it may be able to produce each unit of a good or service more efficiently, leading to lower costs. For example, a company that produces computer chips may adopt a new manufacturing process that reduces the number of defects and lowers the cost of producing each chip.

In addition, average total cost may be declining due to increased competition in the market. As firms compete with each other to attract customers, they may be motivated to find ways to lower their costs in order to offer lower prices and remain competitive.

Overall, declining average total cost is a positive development for firms as it allows them to potentially increase their profits by producing and selling more units at a lower cost. It can also benefit consumers, as lower production costs may lead to lower prices for the goods and services they purchase.

Microeconomics Chapter 9 Flashcards

if average total cost is declining then

If the inputs of all resources are increased by equal amounts, total output will expand by diminishing amounts. Average fixed cost intersects marginal cost at the latter's minimum point. Both the statements are individually true but Statement II is not the correct explanation of Statement I C. Suppose a firm is in a range of production where it is experiencing economies of scale. Proportionate increases in the inputs of all resources will result in a less-than-proportionate increase in total output.

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CH 8 ECON130 Flashcards

if average total cost is declining then

Firms in the market are producing output, but they are currently making economic losses. False Average Total Cost and Marginal Cost Average total cost ATC is found by totaling the costs to the firm for a certain production level, but then dividing by that quantity. The unlabeled red curves in this figure illustrate the: a. Be sure to capture. What happens when average total cost is decreasing?. Both the statements are individually true but Statement II is not the correct explanation of Statement I C. Total cost will exceed total variable cost.

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If the average total cost is declining then :

if average total cost is declining then

When average total cost is declining then: a marginal cost must be less than average cost b marginal cost must be greater than average cost c average toal cost must be greater than average fixed cost d average variable cost must be declining. Generally, firms will incur additional costs to produce more goods and services and the additional costs incurred to do so are the marginal costs. Statement II : Laterite soils generally experience leaching. Statement I is false but Statement II is true -- View Answer 10. TFC to increase by constant amounts. Increasing labour to the fixed capital results in an increase in productivity. Accounting profits are typically: A.

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When average total cost is declining then: a) marginal cost must be less than average cost

if average total cost is declining then

What is marginal cost? In the short run: A. Why does the average variable cost and average total cost both first decrease and then increase? Statement I is false but Statement II is true -- View Answer 9. Marginal cost is the: A. As successive amounts of one resource labor are added to fixed amounts of other resources capital , beyond some point the resulting extra output will decline. Both the statements are individually true and Statement II is the correct explanation of Statement I B. When average cost is declining as output increases, marginal cost is less than average cost. Statement I is true but Statement II is false D.


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If Average Total Cost is declining then

if average total cost is declining then

When average cost is neither rising nor falling at a minimum or maximum , marginal cost equals average cost. Answer and Explanation: 1. In considering what to do, which of the above would be considered a sunk cost? The main functioning of the banking system is to : A. The long-run average total cost curve: A. Which of the following is correct as it relates to cost curves? Both the statements are individually true and Statement II is the correct explanation of Statement I B. Statement I is true but Statement II is false D. Average fixed costs would rise, but marginal costs would fall.

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If average total cost is falling as output increases, then marginal costs must be falling as well. a. True b. False

if average total cost is declining then

Other things equal, if the prices of a firm's variable inputs were to fall: A. Statement I : Kali age reflects the presence of deep social crisis characterized by varnasankara i. TVC will increase for a time at a diminishing rate, but then beyond some point will increase at an increasing rate. In the short run, which of the following statements is correct? Average fixed costs and average total costs would rise. TVC to increase initially by increasing amounts, but eventually by decreasing amounts.

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Why does average total cost decline at first then start rising as output is increased?

if average total cost is declining then

Diseconomies of scale arise primarily because: A. Both the statements are individually true but Statement II is not the correct explanation of Statement I C. As a firm produces successive units of output in the short run we would expect: A. Statement I : Typical laterite soils in India are generally fertile. I know that the total cost is 0. In the short run, which of the following statements is correct? With decreasing marginal returns, more variable inputs are needed to produce a given incremental increase in output. The average fixed cost curve will always A.


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If average total cost is declining, then: A. marginal cost must be greater than average total cost. B. the average fixed cost curve must lie above the average variable cost curve. C. marginal cost must be less than average total cost. D. total cost must also be declining.

if average total cost is declining then

Consider This If the law of diminishing returns applies to study time: A. Marginal costs and average variable costs would both rise. Statement I : Southern part of France is famous for wine making industry. Average fixed costs and average variable costs would rise. You want to determine the profit-maximizing production quantity for a monopolist.

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