Answer to Question #277114 in Microeconomics for Boobie

Question

You are looking at cost curves. The value associated with the marginal cost

(MC) on the graph is higher than the value associated with the corresponding

average variable cost. (AVC). In other words MC is above AVC. This means:

Select one:

O a. average variable cost (AVC) is increasing

O b. average variable cost (AVC) is falling

O c. average variable cost (AVC) is remaining constant

O

d. none of the above

Answer 1

If MC is above AVC, then average variable cost (AVC) is increasing, because MC = AVC when AVC is at its minimum.

So, the correct answer is a.