When the Marginal Cost Curve Lies Below the Average Variable

question 58

Multiple Choice

When the marginal cost curve lies below the average variable cost curve, what is happening to the average variable cost?

• A) The average variable cost is zero.
• B) The average variable cost is increasing.
• C) The average variable cost is decreasing.
• D) The average variable cost does not change.

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Definitions:

Minimum Wages

The lowest legal hourly pay that employers can offer to workers, intended to protect employees from unduly low earnings.

Federal Level

Pertaining to the national government, as opposed to state, local, or municipal levels, involving decisions, laws, and policies that affect the entire country.

Equilibrium Price

A financial point in the marketplace where goods supplied and goods demanded are identical in quantity.

Price Floor

A price floor is a minimum price set by the government or another body, below which the price of a product cannot fall.