Answer:
C. Marginal cost will equal average total cost when marginal cost is at its lowest point.
Explanation:
Marginal cost is the cost of each extra unit sold or produced. Average total cost is the average cost of all the units which is sold or produced during the period.
If marginal cost equal to the average cost the marginal can not be its lowest point because the lowest point cost will decrease the average cost it will not be equal to average cost, otherwise at the units has same marginal cost.
Answer:
C) Marginal cost will equal average total cost when marginal cost is at its lowest point
Explanation:
Average cost refers to total cost divided by output.
Average cost(AC)= Total cost(TC)/ output
Marginal cost refers to the change in total costs as a result of a change in unit of quantity produced.
Marginal cost (MC)= change in total cost(TC)/change in output.
Total cost(TC) is the addition of total fixed cost and total variable cost
Total cost(TC)= Total fixed cost+ Total variable cost
Fixed cost(FC) are cost that doesn't change before, during and after production process such as buildings, machineries, furnitures.
Variable cost (VC) are cost that change in the process of production such as raw materials.
There are three basic relationships between marginal cost and average total cost. They are;
1) When Average total cost Falls, Marginal cost is Lower than Average total cost.
(2) When Average total cost Rises, Marginal cost is Greater than Average total cost.
3) When Average total cost is constant, Marginal cost is equal to Average total cost.
Marginal cost can only be equal to Average total cost when average total cost is constant.
