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14 November, 09:11

Use the following two statements to answer this question:I. The average total cost of a given level of output is the slope of the line from the origin to the total cost curve at that level of output. II. The marginal cost of a given level of output is the slope of the line that is tangent to the total cost curve at that level of output. A. I is true, and II is false. B. Both I and II are true. C. I is false, and II is true. D. Both I and II are false.

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  1. 14 November, 11:22
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    B. Both I and II are true.

    Explanation:

    It is true that the average total cost of a given level of output is the slope of the line from the origin to the total cost curve at that level of output.

    Average Total Cost tends to fall as output increases, and then rise as output continues to increase.

    It is also true that the marginal cost of a given level of output is the slope of the line that is tangent to the total cost curve at that level of output.

    The slope of the total variable cost curve is marginal cost. The relation between total cost and marginal cost is but another in the long line of applications of the total-marginal relation. The slope of the total cost curve (and total variable cost curve) is marginal cost.

    Marginal cost (MC) is calculated by taking the change in total cost between two levels of output and dividing by the change in output. The marginal cost curve is upward-sloping.
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