Assume a firm is operating at minimum average total cost in the short run. If there is a decrease in output, it follows that

A) marginal cost increases.
B) average fixed cost increases.
C) average total cost decreases.
D) average variable cost increases.

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Tiara Archer · Accepted Answer

Final Answer : B, Explanation :  When a firm decreases its output, its total fixed costs (such as rent, salaries, and machinery costs) remain the same. However, because these fixed costs are spread over a smaller quantity of output, the average fixed cost (total fixed costs divided by quantity) increases.

Assume a firm is operating at minimum average total cost in the short run. If there is a decrease in output, it follows that

A) marginal cost increases.
B) average fixed cost increases.
C) average total cost decreases.
D) average variable cost increases.

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Learning Objectives

Related questions

Assume a firm is operating at minimum average total cost in the short run. If there is a decrease in output, it follows thatA) marginal cost increases.B) average fixed cost increases.C) average total cost decreases.D) average variable cost increases.

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Learning Objectives

Learning Objectives

Related questions

Assume a firm is operating at minimum average total cost in the short run. If there is a decrease in output, it follows that

A) marginal cost increases.
B) average fixed cost increases.
C) average total cost decreases.
D) average variable cost increases.