Question

What would you say about the position of the marginal cost curve of a firm when AC curve falls?

Answer 1

• When the Average Cost (AC) curve is falling, the Marginal Cost (MC) curve lies below the AC curve.
• As long as MC is less than AC, it pulls the average cost downward, which causes the AC curve to fall.
• So, the MC curve is positioned below the AC curve during this phase.