Start typing, then use the up and down arrows to select an option from the list. # Microeconomics

Learn the toughest concepts covered in Microeconomics with step-by-step video tutorials and practice problems by world-class tutors

The Costs of Production

# The Relationship Between Average Cost and Marginal Cost

## If marginal cost is above average cost, it will drive the average cost up. If marginal cost is below average cost, it will drive the average cost down.

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Average Cost and Marginal Cost 6m
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Patterns of MC, AFC, AVC, and ATC curves 8m
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Problem

A firm is currently producing 100 units with an average total cost of \$44 and a marginal cost of \$32. If it were to increase production to 101 units, which of the following must be true?

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Problem

The government imposes a \$10,000 per year inspection fee on all restaurants. Which cost curves are affected?

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Problem

A firm is producing 1,500 units at a total cost of \$15,000. If it were to increase production to 1,501 units, its total cost would rise to \$15,012. Which of the following is true? 