What is the relationship between the marginal cost MC curve the average total cost ATC curve and the average variable cost AVC curve?
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Costs of Production in a Perfectly Competitive Market
The following graph shows the cost curves for a firm in a perfectly competitive market. Use the sliders to adjust the firm's productive capacity, fixed costs and variable costs, and see how the cost curves change in response. Also, try changing the market price of the product to create break-even, profit, and loss situations.
What is the relationship between the MC curve and ATC AVC curves?When AVC and ATC are falling, MC must be below the average cost curves. When AVC and ATC are rising, MC must be above the average cost curves. Therefore, MC intersects the average cost curves at the average cost curves' minimum points.
What is the relationship between marginal cost curve and average cost curve?The marginal cost curve intersects both the average variable cost curve and (short-run) average total cost curve at their minimum points. When the marginal cost curve is above an average cost curve the average curve is rising. When the marginal costs curve is below an average curve the average curve is falling.
What is the relationship between average total cost ATC and marginal cost MC )?Average total cost (ATC) refers to total cost divided by the total quantity of output produced, . Marginal cost (MC) refers to the additional cost incurred by producing one additional unit of output, .
What is the relationship between the marginal cost curve and the average total cost curve between the marginal cost curve and the average variable cost curve explain?When the marginal unit costs more than the average, the average has to increase. By definition, then, the MC curve intersects the AVC curve at the minimum point on the AVC curve. At the intersection, MC and AVC are equal. If you flip the AVC and MC curves over, they become APL and MP curves.
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