PRC-3 · Chapter 12 · Question 55 of 69
When a firm's Average Cost (AC) is visibly rising on a graph, what must definitively be true about its Marginal Cost (MC)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) MC is higher than AC
Explanation
For an average to rise, the newest (marginal) addition must be greater than the current average. Thus, MC must be higher than AC when AC is sloping upward.
More Firm Theory MCQs
- Q57By substituting the Total Revenue (TR) equation into the Average Revenue (AR) formula, we mathematically observe that AR is always equal to:
- Q58Price discrimination by a monopoly (charging different prices to different groups) is impossible or highly ineffective if:
- Q59Which of the following is NOT a fundamental characteristic of an Oligopoly market structure?
- Q60For a firm operating with a downward-sloping demand curve, its Total Revenue (TR) reaches its absolute mathematical maximum exactly when:
- Q61If oligopolistic firms successfully form a strict, secret cartel (collusion), the market outcome will closely resemble a monopoly, leading…