If marginal cost is above average cost, average cost must be rising.

Question

Quizplus · Accepted Answer

This statement is true because the average cost is calculated by dividing total cost by the quantity produced. If the marginal cost, which is the cost of producing one additional unit, is higher than the current average cost, it means that the cost of each additional unit is higher than the average cost of all units produced so far. This would cause the average cost to increase.

If Marginal Cost Is Above Average Cost, Average Cost Must