Economics (AS & A Level) · Feb / March 2021 · Paper 32 · Question 8

When output increases in the short run, which statement is correct?

1. AAverage fixed cost first falls and then, beyond some point, rises.
2. BAverage variable cost increases as soon as the law of diminishing marginal returns begins to operate.
3. CThe minimum point of the average total cost curve occurs at a greater level of output than the minimum point of the average variable cost curve.
4. DWhen marginal cost reaches its minimum point, average variable cost must be greater than average fixed cost.

As printed in the paper