A firm with fixed costs produces at the lowest point on its U-shaped average variable cost curve. If it raises output by 1 unit, then average:   A) Total cost will be less than average variable cost   B) Fixed cost will necessarily be below average variable cost   C) Total cost will decrease   D) Fixed cost will increase

Microeconomics A Contemporary Intro
10th Edition
ISBN:9781285635101
Author:MCEACHERN
Publisher:MCEACHERN
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 19PAE
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A firm with fixed costs produces at the lowest point on its U-shaped average variable cost curve. If it raises output by 1 unit, then average:

 

A) Total cost will be less than average variable cost

 

B) Fixed cost will necessarily be below average variable cost

 

C) Total cost will decrease

 

D) Fixed cost will increase

 

Please explain

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