When marginal cost is below average total cost, average total cost is falling.

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Quizplus · Accepted Answer

When marginal cost is below average total cost, it means that the additional cost of producing one more unit is less than the overall cost per unit, which results in a decrease in average total cost. This is because when marginal cost is below average total cost, the additional cost of producing one more unit is less than the average cost of all units produced thus far, which brings down the overall average cost.

When Marginal Cost Is Below Average Total Cost, Average Total