Which of the following holds true?
A)There is no relationship between AP and AVC.
B)When MP is rising, AVC is falling, and when MP is falling, AVC is rising.
C)When AP is rising, AVC is falling, and when AP is falling, AVC is rising.
D)When AP is rising, AVC is rising, and when AP is falling, AVC is falling.

Question

Quizplus · Accepted Answer

The relationship between Average Product (AP) and Average Variable Cost (AVC) is inversely related. When AP is rising, it means more output is being produced per unit of input, which typically leads to a decrease in AVC because the cost is spread over more units of output. Conversely, when AP is falling, less output is produced per unit of input, leading to an increase in AVC as the cost is spread over fewer units of output.

Which of the Following Holds True