When marginal cost is BELOW average variable cost,average variable cost must be:
A)above average total cost.
B)below average fixed cost.
C)falling.
D)rising.

Question

Quizplus · Accepted Answer

If marginal cost is below average variable cost, it means that the cost of producing one more unit is less than the average of all variable costs incurred to produce each unit. This implies that the average variable cost is falling, as the marginal cost is pulling it down. It is not necessary to compare it with average total cost or average fixed cost.

When Marginal Cost Is BELOW Average Variable Cost,average Variable Cost