When AVC is falling,ATC

Question

Quizplus · Accepted Answer

When AVC (average variable cost) is falling, it means that the cost of producing each unit is decreasing. This could be due to factors such as economies of scale or technological improvements. However, ATC (average total cost), which is the total cost per unit including fixed costs, may not necessarily be falling because fixed costs are not affected by changes in production levels. Therefore, ATC may remain constant or even rise despite the falling AVC. However, it cannot be rising if the AVC is falling, so option B is the best choice.

When AVC Is Falling,ATC