When average costs of production are falling, average cost:
A) is higher than marginal cost.
B) is equal to price.
C) is negative.
D) is less than marginal cost.

Question

Quizplus · Accepted Answer

When average costs are falling, it means that the addition of more units of production is costing less than the average, indicating that marginal cost (the cost of producing one more unit) is lower than the average cost.

When Average Costs of Production Are Falling, Average Cost