When marginal cost curve is below an average cost curve, average cost is
A)increasing with output.
B)declining with output.
C)not varying with output.
D)none of the statements associated with this question are correct.

Question

Quizplus · Accepted Answer

When the marginal cost curve is below the average cost curve, it pulls down the average cost. This causes the average cost to decrease with an increase in output. Therefore, option (B) is the correct answer.

When Marginal Cost Curve Is Below an Average Cost Curve