When the marginal cost curve is below an average cost curve, the average cost is [Math Processing Error]

Accounting Dec 08, 2020

When the marginal cost curve is below an average cost curve, the average cost is [Math Processing Error].

Expert Solution

When the marginal cost curve is below an average cost curve, the average cost is declining.

The reason is that the marginal cost cuts average cost curve from below. Average cost starts increasing at quantities after the intersection. So, it must be falling before such intersection.

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