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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?
27. Which of the following reflects the correct relationship between the average total cost (ATC) and marginal cost (MC)?
A. When MC < ATC; ATC is falling.
B. When MC < ATC; ATC is constant.
C. When MC > ATC; ATC is falling.
D. When ATC < MC; MC is falling.
E. When ATC is minimum; ATC < MC.
24. Which of the following statements is incorrect? a. ATC below MC implies rising ATC. b. MC below ATC implies falling ATC. C ATC falling implies MC below ATC. d. IfATC = MC for all quantities then ATC is horizontal. e. MC rising implies ATC rising.
