Question map
Not attempted Correct Incorrect ★ Bookmarked
Loading…
Q56 (CDS-II/2013) Economy › Basic Concepts & National Income › Consumer theory basics Answer Verified

If the average total cost is declining then :

Result
Your answer: —  Â·  Correct: A
Explanation

In microeconomics, the relationship between marginal cost (MC) and average total cost (ATC) is fundamental to cost theory. When the average total cost is declining, the marginal cost must be less than the average total cost [1]. This occurs because the cost of producing one additional unit (MC) is lower than the current average, thereby pulling the overall average down. The MC curve intersects the ATC curve at its minimum point; to the left of this intersection, where ATC is falling, MC is always positioned below ATC [1]. Conversely, when MC is greater than ATC, the average total cost begins to rise. This mathematical relationship is analogous to how a student's grade on a new assignment (marginal) affects their cumulative grade point average (average). Therefore, if ATC is decreasing, MC is necessarily lower than ATC.

Sources

  1. [1] Microeconomics (NCERT class XII 2025 ed.) > Chapter 3: Production and Costs > Shapes of the Long Run Cost Curves > p. 50
How others answered
Each bar shows the % of students who chose that option. Green bar = correct answer, blue outline = your choice.
Community Performance
Out of everyone who attempted this question.
50%
got it right
✓ Thank you! We'll review this.

SIMILAR QUESTIONS

CDS-II · 2024 · Q70 Relevance score: 2.86

Which one of the following statements for a firm's equilibrium in Perfect Competition is not correct? (a) The market price must be greater or equal to average variable cost in the short run. (b) The market price must be equal to marginal cost. (c) The market price must be equal to average cost in the long run. (d) The marginal cost decreases at the equilibrium output.

CDS-II · 2014 · Q91 Relevance score: 1.59

Which one among the following pairs is not correctly matched ?

CDS-I · 2019 · Q91 Relevance score: 0.16

Which one of the following statements is not correct?

CDS-II · 2014 · Q96 Relevance score: -0.64

Which of the following statements are correct? 1. .When marginal revenue is positive, total revenue increases with increase in output. 2. When marginal revenue is zero, total revenue is maximum. 3. When marginal revenue becomes negative, total revenue falls with increase in output , Select the correct answer using the code given below:

CDS-I · 2018 · Q120 Relevance score: -0.74

According to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to