If the short-run average variable costs of production for a firm are rising, then this indicates that
A)average total costs are at a maximum.
B)average fixed costs are constant.
C)marginal costs are above average variable costs.
D)average variable costs are below average fixed costs.

Question

Quizplus · Accepted Answer

When the short-run average variable costs (AVC) of production for a firm are rising, it typically indicates that marginal costs (MC) are above the AVC. This is because the marginal cost curve intersects the average variable cost curve at its minimum point. When MC is above AVC, it pulls the average up, indicating that each additional unit of output is more expensive to produce than the units before, thus causing the AVC to rise.

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