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- Subject
- Costs , Supply And Perfect Competitioneconomics-mcqs › costs-supply-and-perfect-competition
- Published
- 2 Jun 2019
- Last updated
- 28 May 2026
What is the relationship between marginal cost and average cost when the average cost is decreasing and when it is increasing?
Multiple choice question for Costs , Supply And Perfect Competition. Select an option, then review the explanation below.
Explanation
When the average cost is declining, the marginal cost lies below the average cost, pulling it down. Conversely, when the average cost is rising, the marginal cost is above the average cost, causing it to increase.
More Costs , Supply And Perfect Competition MCQs
Practice related questions from the same subject.
- 1.In the context of a perfectly competitive firm, what represents its short-run supply curve and its long-run supply curve respectively?
- 2.Under what condition will a firm cease production and produce nothing in the short term?
- 3.In the short run, the average total cost is composed of which two components?
- 4.What does it indicate when the long-run average cost curve slopes downward from left to right?
- 5.Which characteristic best describes a monopoly market structure?