So long as marginal cost is greater than average variable cost,both average variable cost and average total cost must increase as output is increased.

Question

Quizplus · Accepted Answer

This statement is incorrect. As long as marginal cost is greater than average variable cost, only the average total cost will increase as output is increased. The average variable cost may decrease or stay constant in the short run, depending on the shape of the marginal cost curve and the level of fixed costs.

So Long as Marginal Cost Is Greater Than Average Variable