When marginal cost is greater than average variable cost, average variable cost must be rising.

Question

Quizplus · Accepted Answer

Marginal cost is the change in total cost when one more unit of output is produced. When marginal cost is greater than average variable cost, it means that the cost of producing an additional unit is higher than the average cost of producing all units so far. This indicates that the variable costs per unit are increasing, which causes the average variable cost to rise. Therefore, the statement is true.

When Marginal Cost Is Greater Than Average Variable Cost, Average