Question

Consider the relationship between the MC and ATC. Explain that relationship when:

a. If the MC is > ATC, what is happening to the ATC and why?

b. If the MC is < ATC, what is happening to the ATC and why?

c. If the MC = ATC, what is happening to the ATC and why?

d. If the ATC is at it lowest point, what does that mean for profits? For production profits?