If the average cost curve is downward sloping,then
A) marginal cost is smaller than average cost.
B) the marginal cost curve is also downward sloping.
C) there are increasing marginal returns to labor.
D) wages and other input prices are falling.

Question

Quizplus · Accepted Answer

If the average cost curve is downward sloping, it means that the cost per unit is decreasing as more units are produced. This implies that the marginal cost of producing an additional unit is smaller than the average cost of producing all the previous units. Therefore, choice A is the correct answer. The other choices are not necessarily related to a downward sloping average cost curve.

If the Average Cost Curve Is Downward Sloping,then