When the average variable cost curve is upward sloping, the marginal cost curve:

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BlackTom AI · Accepted Answer

To analyze the relationship between average variable cost (AVC) and marginal cost (MC), we examine how MC compares to AVC when AVC is rising.
Option a: 'must be above the average variable cost curve.' When AVC is increasing, the additional cost of producing one more unit (MC) tends to exceed the average variable cost, placing MC above AVC. This aligns with the typical behavior where MC intersects AVC at its minimum point and lies above AVC when AVC is upward sloping.
Option b: 'is below the average variable cost curve.' If MC were below AVC while AVC is rising, it would imply that the next unit reduces the AVC, which contradicts the definition of AVC being upward sloping. This makes option b incorrect.
Option c: 'is a straight line.' The shape of the MC curve is not determined to be a straight line simply because AVC is rising. In fact, MC can be curved; the problem doesn’t provide a reason to assume linearity, so this statement is unfounded.
Option d: 'is upward sloping.' While MC is often rising when output is beyond the AVC minimum, the essential fact asked is the relative position to AVC. The core relationship in this scenario is that MC lies above AVC, not merely that MC is upward sloping. Therefore this option is not as precise as option a.
In summary, the correct conceptual takeaway is that when AVC is upward sloping, MC sits above AVC, making option a the accurate choice.

THC - MCD2020 - T3 - 2025 Homework Quiz 6 - Cost of Production

When the average variable cost curve is upward sloping, the marginal cost curve:

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