Question
Can MC increase when AC falls?
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Answer
Yes, it can happen when MC is below, than AC at the time of MC increases. The reason is that MC is confined to only one unit of the commodity produced whereas AC is related to all the units of commodity produced. As a result when MC increase, in case of MC, the whole increase is confined to the concerned one unit but in case of AC, this increase is shared by all commodity produced. As the result of, rising MC is unable to bring about an increase in AC.
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