There is a cost function such that marginal cost is always less than average cost.
What happens when marginal cost is less than average cost?
- Average variable cost is falling when marginal cost is lower than average variable cost.Average variable cost is rising when marginal cost exceeds average variable cost.
- The average cost and marginal cost are the same when the average cost is steady and at its lowest point.As the average cost declines, the marginal cost is less than the typical cost.
- When the average cost increases, the marginal cost is larger than the average cost.When the average cost stays constant, the marginal cost equals the average cost (at a minimum or maximum).
- The term "marginal cost" describes the rise in manufacturing costs brought on by the creation of more product units.
- The term "average cost" refers to the production cost per unit, which is determined by dividing the overall production cost by the overall number of units produced.In other words, it calculates how much money is required for each unit of production produced by the company.
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