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

Question

Quizplus · Accepted Answer

When the marginal cost is below average variable cost, it means that producing one more unit of output is cheaper than the average cost of producing each unit of output. This implies that the average variable cost is falling, as the additional unit being produced is lowering the overall variable cost of production. Therefore, the correct answer is C.

When Marginal Cost Is Below Average Variable Cost, Average Variable