Which of the following statement is (are) TRUE? I. If marginal cost is rising, the average...
Which of the following statement is (are) TRUE?
I. If marginal cost is rising, the average total cost must be rising.
II. The marginal cost curve intersects both the average total and average variable cost curves at their minimum points.
III. If marginal cost is less than average variable cost, the average variable cost curve is negatively sloped.
a) I, II and III
b) I and III
c) II
d) II and III
Homework Answers
Answer
Option d
II. The marginal cost curve intersects both the average total and average variable cost curves at their minimum points.
III. If marginal cost is less than average variable cost, the average variable cost curve is negatively sloped.
The marginal cost is a change in total cost as well as varible cost so the marginal cost cut at the minimum of ATC and AVC and the both curves negatively sloped up the MC is below them.
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