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Practice mode Average And Total Cost

What is true when marginal cost equals average total cost?

Correct answer D. Average total cost is minimised

Explanation

Marginal cost crosses average total cost at its lowest point, because below that ATC is being pulled down and above it ATC is being pushed up.

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Question 04 Average And Total Cost

Naila makes 1,000 pieces of pottery a year and sells them for Rs100 each. Raw materials cost Rs20,000. She has invested Rs100,000 in her factory and equipment: Rs50,000 of her own savings and Rs50,000 borrowed at 10 percent (she could also have lent her own money at 10 percent). She could earn Rs40,000 a year at a rival pottery factory. What is the economic profit of her factory?

Correct answer B. Rs30,000

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