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What is the Relation Between Marginal Cost and Average Variable Cost When Marginal Cost is Rising and Average Variable Cost is Falling? - Economics

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What is the relation between marginal cost and average variable cost when marginal cost is rising and average variable cost is falling?

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Solution

The falling average variable cost (AVC) relates according to the increasing returns to the factor and the rising marginal cost (MC) reacts according to the rising marginal product. Hence, the rising MC and the falling AVC shows that the MC will lie below the AVC.

Concept: Relationship Between Average Variable Cost and Average Total Cost and Marginal Cost
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