You should never ever forget the three rules that guide the behavior of marginal

Question

You should never ever forget the three rules that guide the behavior of marginal and average. They are------------ a. 1) when marginal is greater than average, average declines 2) when marginal is equal to average, average increases 2) when marginal declines, average declines too b. 1) average and marginal are same when average is constant 2) when averages declines, marginal is less than average 3) when average increases, marginal increases c. 1) average and marginal are same when average is constant 2) when averages declines, marginal is greater than average 3) when average increases, marginal decreases d. 1) average and marginal are same when average is constant 2) when averages declines, marginal is less than average 3) when average increases, marginal is greater than average.

Explanation / Answer

The right answer is option d.

Marginal refers to the change in a parameter for an additional unit of a variable. When the marginal is higher than the average, the average keeps increasing. Also, when the marginal is lower than the average, the average keeps decreasing.

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