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Average Cost of Units of Output

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If it costs the firm $54 to produce 6 units of output and $40 to produce 5 units of output, average cost:

a) is greater than marginal cost and average cost is rising
b) is less than marginal cost and average cost is rising
c) equals marginal cost
d) is greater than marginal cost and average cost is falling
e) is less than marginal cost and average cost is falling

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Solution Summary

The average cost of units of output are determined. Marginal cost and average costs is falling is found.

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