Is it possible for average total cost to be decreasing over a ...

[cabate]

Is it possible for average total cost to be decreasing over a range of output where marginal cost is increasing? Briefly explain.
 
  What will be an ideal response?

Question 2

Some economists have argued that path dependence and switching costs can lead to market failure. Which of the following is an example of this argument?
 
  A) VHS video recorders became more popular with consumers than Sony Betamax recorders even though the Betamax recorders embodied a superior technology.
  B) A consumer who won a lottery for a Super Bowl ticket refuses to sell it for 3,000 even though he would not have paid 3,000 for a ticket if he had not won the lottery.
  C) Costly celebrity endorsements lead many consumers to buy a product even though it is more expensive or less effective than a product that is not endorsed by a celebrity.
  D) While playing the ultimate game, an allocator decides to share 20 equally with a recipient rather than keep the 20 for herself.

[fraziera112]

Answer to Question 1

Yes. As long as the marginal cost is below the average total cost, average total cost will be decreasing.

Answer to Question 2

A