Manag., November-2017 – Q4
0. Which one of the following statements is not correct?
- Option : D
- Explanation : The marginal-average rule states that when marginal cost is below average cost, the average cost falls. When marginal cost is above average cost, the average cost rises. When marginal cost equals average cost, the average cost is at its minimum point. Now consider the MC curve in Fig. given below. In the range of output from zero to 6 units per hour, the MC curve is below the AVC curve, and AVC is falling. Beyond 6 units per hour, the MC curve is above AVC, and AVC is rising.
