If the short-run average variable cost of production for a firm is decreasing, then it follows that
A)average variable cost must be above average fixed cost.
B)marginal cost must be below average variable cost.
C)average fixed cost must be constant.
D)marginal cost must be decreasing.

Question

Quizplus · Accepted Answer

When the short-run average variable cost (AVC) of production for a firm is decreasing, it implies that the marginal cost (MC) is below the AVC. This is because the AVC will decrease only if the additional unit costs less to produce than the units before it, which is what MC being below AVC indicates.

If the Short-Run Average Variable Cost of Production for a Firm