As long as marginal cost is less than average variable cost:
A)both average total costs and average variable costs will be falling.
B)average total costs will be falling but average costs may be rising or falling.
C)average fixed costs are rising.
D)average total costs are falling but average fixed costs may be rising.

Question

Quizplus · Accepted Answer

When marginal cost is less than average variable cost, it means the cost of producing one more unit is less than the average of all units produced so far, which pulls the average variable cost down. Since average total cost includes average variable cost, it will also fall.

As Long as Marginal Cost Is Less Than Average Variable