If average cost is decreasing,
A) marginal cost equals average cost.
B) marginal cost exceeds average cost.
C) marginal cost is less than average cost.
D) Not enough information is given.

Question

Quizplus · Accepted Answer

If average cost is decreasing, it means that the cost of producing each additional unit is less than the average cost of all the units produced so far. Therefore, marginal cost (the cost of producing one more unit) is less than average cost.

If Average Cost Is Decreasing