If marginal cost is less than average cost, average cost must fall when more units are produced.

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Quizplus · Accepted Answer

When the marginal cost is less than the average cost, it means that the average cost is decreasing. This implies that producing additional units will bring down the average cost further, causing it to fall. Therefore, if marginal cost is less than average cost, average cost must fall when more units are produced.

If Marginal Cost Is Less Than Average Cost, Average Cost