If marginal cost of an additional unit of output is greater than average cost, then average cost will rise.

Question

Quizplus · Accepted Answer

When the marginal cost of producing an additional unit of output is higher than the average cost of all the units produced, it means that the cost of producing the last unit is higher than the average cost of all previous units. This increase in cost will pull up the overall average cost. Therefore, if the marginal cost is greater than average cost, then average cost will rise.

If Marginal Cost of an Additional Unit of Output Is