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Suppose you are the owner of a small t-shirt printing business. while conducting a cost analysis of your business, you find that at current production levels, your average total costs (atc) are $10. you also know that if you increase production by one more unit, the marginal cost of that unit will be $5. if you produce another t-shirt:

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If the owner produce another t-shirt, the average total costs of production will decrease.  This is so, since the cost will be shared by the additional shirt.

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