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When the average cost is greater than the marginal cost, the firm is producing in which

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter7: Economies Of Scale And Scope

Section: Chapter Questions

Problem 11MC

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Question

When the average cost is greater than the marginal cost, the firm is producing in which

The average cost is decreasing.

The marginal cost is decreasing.

The average cost is increasing.

The total cost is decreasing.

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Step 1: Define average cost and marginal cost for a firm.

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Step 2: Determine what happens when the average cost is greater than the marginal cost.

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