Which of the Following Statements Regarding the Relationship Between Average

question 141

Multiple Choice

Which of the following statements regarding the relationship between average and marginal costs is INCORRECT?

• A) There is always a definite relationship between average and marginal cost.
• B) When marginal costs are less than average costs, the latter must fall.
• C) When marginal costs are greater than average costs, the latter must rise.
• D) There is no way for average variable costs to fall when marginal costs are falling.

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Definitions:

SUVs

Sport Utility Vehicles, a category of motor vehicles that combine elements of road-going passenger cars with features from off-road vehicles, like higher ground clearance and four-wheel drive.

Motorcycles

Two-wheeled vehicles powered by an engine, often used for transportation, recreation, or sport.

United States

A country located primarily in North America, consisting of 50 states, a federal district, five major self-governing territories, and various possessions.

Comparative Advantage

A concept in international trade that refers to the ability of a country to produce a good or service at a lower opportunity cost than its trade partners.