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Question
When average cost is falling, marginal cost curve:
When average cost is falling, marginal cost curve:
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Solution
The correct option is D Is below the average cost curve
When the marginal cost is less than average cost, average cost falls with an increase in output. Thus as long as the MC curve lies below the ATC curve, the ATC curve will slope downwards.
When the marginal cost is less than average cost, average cost falls with an increase in output. Thus as long as the MC curve lies below the ATC curve, the ATC curve will slope downwards.
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