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Question 1. Examine whether each of the following statements is true or false. Explain. a. [10...

Question 1. Examine whether each of the following statements is true or false. Explain. a. [10 points] When MC is greater than ATC then AVC rises as output rises. b. [10 points] When MC is less then A VC then ATC falls as output rises.

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(a) TRUE when MC is greater than ATC , then AVC rises as output rises . Because MC cuts AVC and ATC at their respective minimums . MC cuts ATC at the higher output level than when MC cuts AVC. And when MC is greater than ATC , then both AVC and ATC rises as output rises as shown in the figure below:

(b) TRUE When MC is less than AVC , then ATC falls as output rises.Because MC cuts AVC and ATC at their respective minimums . MC cuts AVC at the lower output level than when MC cuts ATC. And when MC is less than AVC , then both AVC and ATC falls as output rises as shown in the figure below:

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