Question

What is the correct answer If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then
a.marginal cost is above average variable cost.
b.marginal cost is below average fixed cost.
c.marginal cost is below average variable cost.
d.average fixed cost is constant.

Answer 1

Answer:

c.marginal cost is below average variable cost.

Explanation:

The marginal cost is falling due to the diminishing returns to scale which causes the cost to rise, and followed by the constant returns the increasing returns to the variable factors causes the marginal cost to fall below the average variable cost.