Identify the truthfulness of the following statements.
I. When marginal cost is rising, average total cost is rising.
II. When marginal cost is below average total cost, average total cost is falling.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Question

Identify the truthfulness of the following statements. 
I. When marginal cost is rising, average total cost is rising.
II. When marginal cost is below average total cost, average total cost is falling.
A) Both I and II are true.
B) Both I and II are false.
C) I is true; II is false.
D) I is false; II is true.

Quizplus · Accepted Answer

When marginal cost is below average total cost, it pulls the average total cost down, causing it to fall. However, marginal cost can be rising while still being below average total cost, so average total cost may not necessarily be rising.

Identify the Truthfulness of the Following Statements