PPSCFPSCNTSPakistan govt jobs
- Subject
- Average And Total Costeconomics-mcqs › average-and-total-cost
- Published
- 2 Jun 2019
- Last updated
- 28 May 2026
What happens to the average total cost when marginal cost is equal to average total cost?
Multiple choice question for Average And Total Cost. Select an option, then review the explanation below.
Explanation
When marginal cost equals average total cost, the average total cost is at its minimum value. This is because if marginal cost is below average total cost, the average is decreasing, and if it is above, the average is increasing. Therefore, equality indicates the lowest point of average total cost.
More Average And Total Cost MCQs
Practice related questions from the same subject.
- 1.When a production function shows initially rising marginal product followed by diminishing marginal product as output grows, how will the marginal cost curve behave?
- 2.What happens to the average total cost when marginal cost is less than the average total cost?
- 3.Which of the following statements accurately describes cost behavior over time?
- 4.How does the slope of a production function change when it demonstrates diminishing marginal returns?
- 5.Naila runs a small pottery business producing 1,000 items annually, each sold at Rs 100. The raw materials cost her Rs 20,000 for these 1,000 pieces. She has invested Rs 100,000 in the factory and equipment, half from her own savings and half borrowed at an interest rate of 10%. (Assume she could have alternatively invested her own money elsewhere at 10% interest.) Additionally, Naila has the option to work at another pottery factory earning Rs 40,000 per year. What is the economic profit from Naila's pottery business?