A firm is producing 20 units with an averagetotal cost of $25 and a marginal cost of $15. Ifit increases production to 21 units, which of thefollowing must occur?a. Marginal cost will decrease.b. Marginal cost will increase.c. Average total cost will decrease.d. Average total cost will increase.

A firm is producing 20 units with an averagetotal cost of $25 and a marginal cost of $15. Ifit increases production to 21 units, which of thefollowing must occur?a. Marginal cost will decrease.b. Marginal cost will increase.c. Average total cost will decrease.d. Average total cost will increase.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 4CQQ

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Question

A firm is producing 20 units with an average
total cost of $25 and a marginal cost of $15. If
it increases production to 21 units, which of the
following must occur?
a. Marginal cost will decrease.
b. Marginal cost will increase.
c. Average total cost will decrease.
d. Average total cost will increase.

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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