Which of the following explains the relationship between the average cost function and the marginal cost function of a firm? I.If the marginal cost is below the average cost, the average cost function is falling. II. If the marginal cost is above the average cost, the average cost function is falling. III. At the level of output for which average cost is minimized, marginal cost is equal to average cost.

MCQs on major topics and theories in the field of Industrial Organization. Topics include: Market structure analysis and the strategic behaviors of competing firms, including (but not limited to) product differentiation, collusion, price discrimination, pricing strategy, non-price discrimination (i.e. advertising), horizontal mergers, vertical integration, and vertical restraints.