-If average variable costs are increasing while average total costs are decreasing, then
A) marginal cost must lie between average variable and average total costs.
B) marginal cost must equal average variable cost.
C) marginal cost must equal average total cost.
D) fixed costs must be zero.

Question

-If average variable costs are increasing while average total costs are decreasing, then
A) marginal cost must lie between average variable and average total costs. 
B) marginal cost must equal average variable cost. 
C) marginal cost must equal average total cost. 
D) fixed costs must be zero.

Quizplus · Accepted Answer

When average variable costs (AVC) are increasing and average total costs (ATC) are decreasing, marginal cost (MC) must be above AVC (since AVC is increasing) and below ATC (since ATC is decreasing). This implies that MC lies between AVC and ATC.

-If Average Variable Costs Are Increasing While Average Total Costs