When marginal cost is above average variable cost, average variable cost must be:
A) at its minimum.
B) at its maximum.
C) falling.
D) rising.

Question

Quizplus · Accepted Answer

When marginal cost is above average variable cost, it means that the additional cost associated with producing one more unit of output is higher than the average cost of producing the previous units, which implies that the average variable cost must be rising. This is because the average variable cost is calculated by dividing the total variable cost by the quantity produced, and if the marginal cost is higher than the average variable cost, it means that the additional cost of producing one more unit is higher than the average cost of the previous units, and therefore the average variable cost must be increasing.

When Marginal Cost Is Above Average Variable Cost, Average Variable