If average variable cost is falling with increasing output, then
A)marginal cost must be less than average variable cost.
B)marginal cost must be greater than average variable cost.
C)average fixed cost is rising.
D)marginal cost must be rising.
E)marginal cost must be falling.

Question

Quizplus · Accepted Answer

When average variable cost (AVC) is falling, it means the additional unit of output is being produced at a lower cost than the average of all previous units, indicating that marginal cost (MC) is less than the AVC.

If Average Variable Cost Is Falling with Increasing Output, Then