Question 6.7.6: Let C(x) be the total cost of producing x units of a commodi......

{\frac{\operatorname{d}}{\operatorname{d}x}}\left({\frac{C(x)}{x}}\right)={\frac{C^{\prime}(x)x-C(x)}{x^{2}}}={\frac{1}{x}}\left(C^{\prime}(x)-{\frac{C(x)}{x}}\right)    (6.7.4)

Note that the marginal cost C^{\prime}(x) exceeds the average cost C(x)/x if, and only if, average cost increases as output increases.^{11}

^{11} In a similar way, if a basketball team recruits a new player, the average height of the team increases if and only if the new player’s height exceeds the old average height.