Question

If franco's pizza parlor knows that the marginal cost of the 500th pizza is $3.50 and that the average total cost of making 499 pizzas is $3.30, then

Answer 1

Answer:

The answer is average total costs are rising at Q=500

Explanation:

Average total cost (ATC) equals total cost divided by the entire quantity of units made or produced(total cost ÷ quantity of units produced).

Marginal cost (MC) is additional cost incurred by producing one additional unit of output.

When incremental cost is above average total cost, average total cost are going to be rising and when incremental cost is below average total cost, average total cost are going to be falling.

A firm is producing efficiently at the minimum average total cost, which is additionally where (ATC) = MC