The correct answer is: C. Marginal cost must be below average cost.
When average cost is declining, marginal cost must be below average cost. This is because marginal cost is the additional cost of producing one more unit of output, while average cost is the total cost divided by the number of units produced. When marginal cost is below average cost, it means that the additional cost of producing one more unit is less than the average cost of all the units that have already been produced. This means that the average cost is decreasing, as the total cost is increasing at a slower rate than the number of units produced.
Option A is incorrect because marginal cost can be above average cost when average cost is declining. This can happen when the marginal cost of producing one more unit is greater than the average cost of all the units that have already been produced. This means that the total cost is increasing at a faster rate than the number of units produced, and the average cost is increasing.
Option B is incorrect because marginal cost can be below average cost when average cost is declining. This has already been explained above.
Option D is incorrect because marginal cost can be rising when average cost is declining. This has already been explained above.