If marginal cost is less than average variable cost and output increases, average total cost ________ and average variable cost ________.
A) increases; increases
B) decreases; decreases
C) decreases; increases
D) increases; decreases

Question

Quizplus · Accepted Answer

When marginal cost is less than average variable cost, increasing output will decrease both average variable cost and average total cost, as the additional units cost less than the current average.

If Marginal Cost Is Less Than Average Variable Cost and Output