Giving reasons, state whether the following Its are true or false… - Vidyadip

Question

Giving reasons, state whether the following Its are true or false.
When marginal cost rises, average cost will also rise.

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Answer

False:
Explanation:
AC can fall even when marginal cost is rising. It is so because MC is confined to single unit, i.e., why it falls rapidly and rise rapidly. As, average cost is shared by all the units of the commodity, i.e., why it falls gradually and rise gradually.

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