If average product is falling, what is happening to short-run average variable cost?
A. If average productivity is falling, short-run average variable cost is also falling; to say that productivity falls is equivalent to saying that cost falls.
B. If average productivity is falling, short-run average variable cost could be rising or falling; it depends on what is happening with marginal productivity.
C. Short-run average variable costs are always falling. They are not related to average product.
D. If average productivity is falling, short-run average variable cost is rising; to say that productivity falls is equivalent to saying that cost rises.
Ans: D. If average productivity is falling, short-run average variable cost is rising; to say that productivity falls is equivalent to saying that cost rises.
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