If the average variable cost curve is below the marginal cost curve, then
A) marginal costs must be decreasing.
B) marginal costs must be increasing.
C) marginal costs can be either increasing or decreasing.
D) average variable costs must be decreasing.

Question

Quizplus · Accepted Answer

When the average variable cost (AVC) curve is below the marginal cost (MC) curve, it indicates that the marginal cost is higher than the average, which pulls the average up. This typically happens when marginal costs are increasing.

If the Average Variable Cost Curve Is Below the Marginal