Question

Identify the correct pair of items from the following Columns I and II:

Column I	Columns II
1. MC cuts AC	(a) MC is greater than AC.
2. Derived from TC	(b) Opportunity cost
3. When AC falls	(c) MC is lower than AC.
4. When AC rises	(d) At its minimum points.

Options

• 1 - (a)

• 2 - (b)

• 3 - (c)

• 4 - (d)

Answer 1

3 - (c)

Explanation:

The average cost curve falls when MC is less than AC. AC is the cost of output per unit. When an additional unit of output is produced, MC is added to the total cost.