If a firm's average total costs fall as it produces a larger output,
A) average variable cost must also decline as output expands.
B) marginal cost must also decline as output expands.
C) average fixed cost must be less than average variable costs.
D) marginal cost must be less than average total cost.

Question

Quizplus · Accepted Answer

When average total costs are falling, marginal cost must be less than average total cost because marginal cost pulls the average down.

If a Firm's Average Total Costs Fall as It Produces