1. Find the INCORRECT answer to the following statement.

1. Marginal cost is the

A) change in TC divided by the change in Q.
B) change in VC divided by the change in Q.
C) change in FC divided by the change in Q.
D) additional cost of producing the next Q.
E) change in (FC plus VC) divided by the change in Q.

2. Diminishing marginal returns sets in immediately beyond

A) the lowest point on ATC.
B) the lowest point on the AVC.
C) the lowest point on AFC.
D) the lowest point on MC.
E) where MC touches AVC.

3. Which of the following statements is FALSE?

A) If MC is going downward, this pulls the ATC and AVC downward.
B) If MC is going upward, this indicates diminishing marginal returns has set in.
C) If MC is going upward, the ATC and AVC will always be going upward.
D) If MC is going upward, this could be pulling the average upward or downward.
E) If the MC is going upward above the ATC, this pulls both the ATC and AVC upward.