4. If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units o output is $30.23, what will happen to the average cost of production if the 15th unit is produced? 1. Average cost will fall. My question is why will Average cost fall?

4. If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units o output is $30.23, what will happen to the average cost of production if the 15th unit is produced? 1. Average cost will fall. My question is why will Average cost fall?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

4. If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of
output is $30.23, what will happen to the average cost of production if the 15th unit is produced?
1. Average cost will fall.
My question is why will Average cost fall?

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