If average cost is declining,
A)marginal cost must be below average cost.
B)firms would go bankrupt if all prices were set equal to marginal costs.
C)marginal cost may be declining or increasing.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

If average cost is declining, marginal cost must be below average cost, and firms would go bankrupt if all prices were set equal to marginal costs. Marginal cost may be declining or increasing.

If Average Cost Is Declining