Which of the following statements about cost curves is correct?
A) Average costs always rise when marginal costs rise.
B) Average costs are always higher than marginal costs
C) Average costs always rise through the minimum of marginal costs
D) Marginal costs are negative when average costs are falling
E) Average costs may be falling when marginal costs are rising.
I thought it was A, as when MC>AC then AC rises as stated in many textbooks, however this answer is incorrect.
Can someone explain me why it is E? And why A might not be true, im baffled.
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- Thread Starter
- 18-10-2015 10:56