Question

If the marginal cost of production is greater than the average cost, in what direction must the average cost be changing, if any?

Answer 1

Answer:

Average cost would be rising.

Explanation:

Average cost is the cost of goods produced divided by number of goods produced. Cost of goods include both fixed cost and variable cost. However, marginal cost is the cost incurred in producing on addition unit, it changes the total cost of production. When average cost decline then the marginal cost will be less than average cost. When average cost increases then the marginal cost will be greater than the average cost and if Average cost stay the same then marginal cost will be equal to average cost.