Asked by Nicole Enabosi on May 26, 2024
Verified
Which of the following is true of cost curves?
A) The ATC curve goes through the minimum of the MC curve.
B) The AVC curve goes through the minimum of the MC curve.
C) The MC curve goes through the minimum of the ATC curve, to the left of the minimum of the AVC curve.
D) The MC curve goes through the minimum of the AVC curve, to the right of the minimum of the ATC curve.
E) The MC curve goes through the minimum of both the AVC curve and the ATC curve.
Cost Curves
Graphs that depict the relationship between the cost of producing goods and the quantity of goods produced.
ATC Curve
Average Total Cost (ATC) Curve represents the per-unit cost of production, which includes both fixed and variable costs, plotted against the level of output.
AVC Curve
The Average Variable Cost curve, showing how the variable cost per unit of output changes as the quantity of output is altered.
- Gain an understanding of how cost curves, both average and marginal, relate to production efficiency.
Verified Answer
MP
Maulik PatelMay 31, 2024
Final Answer :
E
Explanation :
The MC (Marginal Cost) curve intersects both the AVC (Average Variable Cost) curve and the ATC (Average Total Cost) curve at their minimum points. This is because when MC is less than either AVC or ATC, it pulls them down, and when MC is more than AVC or ATC, it pushes them up, indicating that the minimum point of AVC and ATC occurs where MC equals AVC and ATC.
Learning Objectives
- Gain an understanding of how cost curves, both average and marginal, relate to production efficiency.