If ATC is declining,MCA) must be below ATC.B) may be below ATC.C) must be above ATC.D) may be above ATC.

Question

Oluchi Nnawuihe · Accepted Answer

Final Answer : A, Explanation :  When ATC is declining, it means that the average cost of production is decreasing. In order for MC (Marginal Cost) to be below ATC, it would mean that the additional cost of producing one more unit is lower than the average cost of production. This is possible when ATC is declining, as the average cost is decreasing while the additional cost may remain constant or increase at a slower rate. Therefore, MC may be below ATC when ATC is declining.

If ATC is declining,MC

A) must be below ATC.
B) may be below ATC.
C) must be above ATC.
D) may be above ATC.

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