The provided statement is false because when the marginal cost is greater than the average cost, then the average cost tends to rise.
The average cost is the cost per unit of a manufactured product. It is determined by dividing the total cost of production by the number of units produced.
The average cost can rise, fall, or have no effect totally depending on the relation of average cost with marginal cost. If marginal cost is higher than average cost. then average cost tends to rise whereas it falls in the reverse case. There is no change in the average cost if both of them are equal.
Therefore, the average cost rises in the scenario where it exceeds the marginal cost.
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