If average cost is falling, then marginal cost must be less than average cost.

Name: If average cost is falling, then marginal cost must be less than average cost.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When average cost is falling, it means that per unit cost is decreasing as production increases. This can only happen if the marginal cost of producing each additional unit is less than the average cost of all previously produced units. Therefore, marginal cost must be less than average cost when average cost is falling.

If Average Cost Is Falling, Then Marginal Cost Must Be