. Assume that the marginal cost of production is less than the average variable cost. Can you determine whether the average variable cost is increasing or decreasing? Explain.If the marginal cost of production is less than the average variable cost of production, thenO A. average variable cost is falling because the cost of the last unit produced is adding to total variable cost.O B. average variable cost could be rising or falling because marginal cost and average variable cost are unrelated.O C. average variable cost is falling because marginal cost and average variable cost are equal.O D. average variable cost is rising because the cost of the last unit produced is adding more to total variable cost than previous units did on average.O E. average variable cost is falling because the cost of the last unit produced is adding less to total variable cost than previous units did on average.

Average Variable Cost refers to the variable cost per unit of output. It can be calculated by…

Assume that the marginal cost of production is less than the average variable cost. Can you determine whether the average variable cost is increasing or decreasing? Explain. If the marginal cost of production is less than the average variable cost of production, then

Assume that the marginal cost of production is less than the average variable cost. Can you determine whether the average variable cost is increasing or decreasing? Explain. If the marginal cost of production is less than the average variable cost of production, then

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Production And Cost In The Firm

Section: Chapter Questions

Problem 3.7P

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Question

Assume that the marginal cost of production is less than the average variable cost. Can you determine whether the average variable cost is increasing or decreasing? Explain.
If the marginal cost of production is less than the average variable cost of production, then
O A. average variable cost is falling because the cost of the last unit produced is adding to total variable cost.
O B. average variable cost could be rising or falling because marginal cost and average variable cost are unrelated.
O C. average variable cost is falling because marginal cost and average variable cost are equal.
O D. average variable cost is rising because the cost of the last unit produced is adding more to total variable cost than previous units did on average.
O E. average variable cost is falling because the cost of the last unit produced is adding less to total variable cost than previous units did on average.

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