AVC can fall even when MC is rising provided ........

Economics- Phase (I & II) Others

AVC can fall even when MC is rising, provided :

MC < AVC

MC > AVC

MC = AVC

None of these

- Average Variable Cost (AVC) can decrease when Marginal Cost (MC) is rising, but only if MC is below the current AVC.

- Option 1: MC < AVC

- MC is adding less to cost than the current AVC, pulling AVC down.

- Correct Answer

- Option 2: MC > AVC

- MC is adding more to cost than the current AVC, pushing AVC up.

- Option 3: MC = AVC

- MC doesn't change AVC; it's a breakeven point.

- Option 4: None of these

- Doesn't apply because Option 1 is correct.

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