Refer to the diagram below Based on the information illustra

Refer to the diagram below. Based on the information illustrated in this graph, which of the following is an accurate statement? Price ATC MC AVC Quantity C is initially downward sloping in the region of increasing MR at low output levels As production increases, marginal revenue always increasc so profits rise as production decreases, marginal revenue will ncrease so profits will risc öfit ?d continue to expand production as long as MR is less than MC

Solution

Option 1. MC is initially downward sloping in the region of increasing MR at low output levels.

Explanation: The graph shows that MC slopes downward initially at a lower production level then reaches a minimum point and then rises again.