[amp_mcq option1=”The average total costs are at a maximum” option2=”The average fixed costs are constant” option3=”The marginal costs are above average variable costs” option4=”The average variable costs are below average fixed costs” correct=”option3″]<\/p>\n
The correct answer is: C. The marginal costs are above average variable costs.<\/strong><\/p>\n Average variable costs (AVC) are the total variable costs divided by the quantity of output produced. Marginal costs (MC) are the change in total costs that results from producing one additional unit of output.<\/p>\n If the AVC are rising, then it means that the additional cost of producing one more unit of output is increasing. This can happen for a number of reasons, such as increasing input prices or decreasing efficiency. When the MC are above the AVC, then the firm is experiencing increasing marginal costs. This means that the firm is facing increasing costs as it produces more output.<\/p>\n The other options are incorrect for the following reasons:<\/p>\n [amp_mcq option1=”The average total costs are at a maximum” option2=”The average fixed costs are constant” option3=”The marginal costs are above average variable costs” option4=”The average variable costs are below average fixed costs” correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-56911","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n\n