Explanation:

- Average Variable Cost (AVC) is the cost per unit of variable input. It falls when each additional unit costs less on average.

- Marginal Cost (MC) is the cost of producing one more unit. If MC is below AVC, producing extra units pulls the AVC down.

- Option 1: MC < AVC (MC is less than AVC)

- AVC can fall when MC is rising if MC is less than AVC.

- Correct because additional units cost less than the average, so average decreases.

- Correct Answer

- Option 2: MC > AVC

- AVC rises if MC exceeds AVC.

- Option 3: MC = AVC

- AVC is constant if MC equals AVC.

- Option 4: None of these

- Irrelevant, as Option 1 is correct.