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At points where marginal cost is greater than average cost,…
a) marginal cost is equal to average cost.
b) marginal cost is having no effect on average cost.
c) marginal cost is pulling up average cost.
d) marginal cost is pulling down average cost.

Ask by Cook Malone. in the United States
Mar 24,2025

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When marginal cost is greater than average cost, it pulls up the average cost.

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Extra Insights

When marginal cost is greater than average cost, that means each additional unit produced is more expensive than the average cost of producing units so far. Consequently, this situation causes the average cost to rise. Picture it like adding a few pricey toppings to a pizza - the overall price increases with each expensive addition!
In the world of economics, the relationship between marginal cost and average cost is crucial for businesses. Understanding this can help firms make decisions about production levels, pricing strategies, and whether they should cut costs or invest in efficiency enhancements. It’s all about staying competitive, just like a bakery striving to perfect its secret recipe while keeping prices appealing!

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