Answer to Question #203073 in Macroeconomics for Rushorna Lewis

Question

explain the relationship between marginal cost and average total cost

Answer 1

Marginal cost is the change in total cost when another unit is produced.

 Average cost is the total cost divided by the number of goods produced.

The relationship between the two is the same as that between any other marginal average  quantities. When Marginal cost  is less than average cost, average cost falls and when marginal cost is greater than average cost, average cost rises.When average cost falls, marginal cost also falls.When average cost rises, marginal cost also rises but marginal cost rises more rapidly than average cost.