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6. Which of the following statements is true regarding the relationship between average and marginal costfunctions?a) When average cost is a decreasing function of output, marginal cost is greater than average cost.b) When average cost neither increases or decreases (because it is constant or at a minimum point),marginal cost is equal to average costc) The average cost function is always smaller than the marginal cost functiond) The average cost function is always greater than the marginal cost functione) When average cost is an increasing function of output, marginal cost is less than average costAns: b
Heading: Costs – Average and Marginal Cost FunctionsLevel: Hard7. The following figure plots Short Run Average Cost functions for small, medium, and large plants.Based on the figure and plots provided, at output Q3which size plant the best choice?