If MC is constant what does it tells about firm's average total costs (assuming positive fixed costs)?

Question

If MC is constant what does it tells about firm's average total costs (assuming positive fixed costs)?

- i indicated MC=MR

MR=P-ATC where MR is constant

so if we dont change P then ATC will be constant.

So the marginal revenue is above the average total cost price the firm is deriving an economic profit.

Is this correct answer?

Answer 1

The average total cost is constantly declining, because the fixed costs are being spread out over an increasingly large number.