Which of the following statements is false? A. When marginal cost is greater than average total cost, average total cost will rise. B. Marginal cost will equal average total cost when average total cost is at its lowest point. C. Marginal cost will equal average total cost when marginal cost is at its lowest point. D. When marginal cost is less than average total cost, average total cost will fall.

C) Marginal cost will equal average total cost when marginal cost is at its lowest point

Explanation:

Average cost refers to total cost divided by output.

Average cost(AC)= Total cost(TC)/ output

Marginal cost refers to the change in total costs as a result of a change in unit of quantity produced.

Marginal cost (MC)= change in total cost(TC)/change in output.

Total cost(TC) is the addition of total fixed cost and total variable cost

Total cost(TC)= Total fixed cost+ Total variable cost

Fixed cost(FC) are cost that doesn't change before, during and after production process such as buildings, machineries, furnitures.

Variable cost (VC) are cost that change in the process of production such as raw materials.

There are three basic relationships between marginal cost and average total cost. They are;

1) When Average total cost Falls, Marginal cost is Lower than Average total cost.

(2) When Average total cost Rises, Marginal cost is Greater than Average total cost.

3) When Average total cost is constant, Marginal cost is equal to Average total cost.

Marginal cost can only be equal to Average total cost when average total cost is constant.

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