Question

.Which of the following must be true if at the tenth unit of output, marginal cost (MC) is $130 average total cost (ATC) is $150?

ATC of producing the ninth unit is higher than $150
MC of producing the ninth unit is higher than $130
The average variable cost of producing the tenth unit is equal to $20
ATC of producing the ninth unit is less than $150

Answer 1

The statements that must be true are 'ATC of producing the ninth unit is higher than $150' and 'MC of producing the ninth unit is higher than $130'. The accuracy of the other statements cannot be determined based on the given information.

Step-by-step explanation:

In order to determine which of the given statements must be true, we need to understand the relationship between marginal cost (MC) and average total cost (ATC).

If the ATC is higher than the MC, it means that producing an additional unit will increase the average costs overall. Therefore, The statement 'ATC of producing the ninth unit is higher than $150' must be true.

On the other hand, if the MC is higher than the ATC, it means that producing an additional unit will increase the average costs overall. Therefore, The statement 'MC of producing the ninth unit is higher than $130' must be true.

However, the provided information does not allow us to determine the accuracy of the statements 'The average variable cost of producing the tenth unit is equal to $20' and 'ATC of producing the ninth unit is less than $150'. Therefore, we cannot conclude whether they are true or false based on the given information.