GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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For the relationship between AC and MC, which of the following statement is wrong?
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If AC Falls, MC will rise
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If AC rises, MC also rises
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Both AC & MC are calculated from TC
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For the minimum point of AC, average cost is equal to marginal cost
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Explanation:
Detailed explanation-1: -Relationship between AC and MC curve shows that when AC is falling, MC may be rising or falling.
Detailed explanation-2: -When the MC curve is lower than the AC curve, i.e., the MC < AC the average cost will tend to fall as if you take a lower number and add it to the average and then take a new average, the new average has to be lower.
Detailed explanation-3: -Answer and Explanation: The correct option is d) When MC exceeds AVC, AVC must be rising. The relationship between MC, AVC and ATC is explained below: AVC and ATC both are falling when MC is falling.
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