MC is greater than AC when production is in a state of diminishing returns.

True

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

False

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is A True
When the production is in a state of diminishing returns, MC will be rising in accordance with falling MP. AC is rising, with the rising MC but less than MC or MC $>$ AC.

Suggest Corrections

Similar questions

Q. AC is greater than MC, so long as AC is falling.

Q. When diminishing returns are reversed by a move to more capital-intensive means of production in agriculture, how does it impact the employment of labour?

Giving reasons, state whether the following statements are true or false:
(i) Average product will increase only when marginal product increases.
(ii) Under diminishing returns to a factor, total product continues to increase until marginal product reaches zero.

Q. It is more profitable for the producer to be in a stage of increasing returns than the stage of diminishing returns.

Q. The hypothesis of eventually diminishing returns applies to production function ___________.

Join BYJU'S Learning Program

MC is greater than AC when production is in a state of diminishing returns.

The correct option is A TrueWhen the production is in a state of diminishing returns, MC will be rising in accordance with falling MP. AC is rising, with the rising MC but less than MC or MC > AC.

The correct option is A True
When the production is in a state of diminishing returns, MC will be rising in accordance with falling MP. AC is rising, with the rising MC but less than MC or MC $>$ AC.