Average cost can never rise while marginal costs are declining.

Question

Quizplus · Accepted Answer

Although it is rare, there are some situations where the marginal cost (the cost of producing one additional unit) can be declining while the average cost (the total cost divided by the total number of units produced) is rising. This can happen when fixed costs or overhead costs become a larger proportion of the total cost as production increases, thus increasing the average cost even as the marginal cost continues to decline.

Average Cost Can Never Rise While Marginal Costs Are Declining