doubts

[maahi]

true /false
1.AC can never rise when MC is falling .

2.In LR a firm always operate at the minimum level  of AC for d optimallly sized plant to produce a given level of output .

my ans is true bt in book ans is false . pls tell me why ??

[mentos]

should be true only.

[Amit Goyal]

1.AC can never rise when MC is falling.
False, consider the following data:
Q  Cost
0    0
1    1
2    4
3    6.6

MC at Q = 2 is 3 and at Q = 3 is 2.6. So MC is falling.
AC at Q = 2 is 2 and at Q = 3 is 2.2. So AC is rising.

2.In LR a firm always operate at the minimum level of AC for the optimally sized plant to produce a given level of output .
True, under the perfect competition assumptions.