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Which of the following is true of the relationship between the marginal cost function and the average cost functions?
- a)If MC is greater than ATC, then ATC is falling.
- b)The ATC curve intersects the MC curve at minimum MC.
- c)The MC curve intersects the ATC curve at minimum ATC.
- d)If MC is less than ATC, then ATC is increasing.
Correct answer is option 'C'. Can you explain this answer?
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Which of the following is true of the relationship between the margina...
Relationship between Marginal Cost and Average Cost Functions
The relationship between the marginal cost (MC) function and the average cost (AC) functions is important in analyzing the cost structure of a firm. Understanding this relationship helps the firm to make decisions related to production and pricing strategies.
Intersection of MC and ATC Curves
The MC curve represents the change in total cost as output increases by one unit, while the ATC curve represents the average cost of producing each unit of output. The point where the MC curve intersects the ATC curve is the minimum point of the ATC curve.
Therefore, the correct statement is option 'C' - The MC curve intersects the ATC curve at minimum ATC. This means that when the MC is equal to the ATC, the ATC is at its minimum point. At this point, the firm is producing at the lowest possible cost per unit of output.
Significance of the Intersection Point
The intersection point of the MC and ATC curves has important implications for the firm. If the firm is producing at a point to the left of the intersection point, the MC is less than ATC, and the ATC is decreasing. This means that the firm can increase its output while reducing its per-unit cost.
On the other hand, if the firm is producing at a point to the right of the intersection point, the MC is greater than ATC, and the ATC is increasing. This means that the firm is producing at a higher cost per unit of output and should reduce its output or find ways to lower its costs.
Conclusion
In conclusion, the relationship between the MC and ATC curves is important in determining the optimal level of production and pricing strategies for the firm. The intersection point of the MC and ATC curves is the minimum point of the ATC curve, and the firm should aim to produce at this point to achieve the lowest possible cost per unit of output.
The relationship between the marginal cost (MC) function and the average cost (AC) functions is important in analyzing the cost structure of a firm. Understanding this relationship helps the firm to make decisions related to production and pricing strategies.
Intersection of MC and ATC Curves
The MC curve represents the change in total cost as output increases by one unit, while the ATC curve represents the average cost of producing each unit of output. The point where the MC curve intersects the ATC curve is the minimum point of the ATC curve.
Therefore, the correct statement is option 'C' - The MC curve intersects the ATC curve at minimum ATC. This means that when the MC is equal to the ATC, the ATC is at its minimum point. At this point, the firm is producing at the lowest possible cost per unit of output.
Significance of the Intersection Point
The intersection point of the MC and ATC curves has important implications for the firm. If the firm is producing at a point to the left of the intersection point, the MC is less than ATC, and the ATC is decreasing. This means that the firm can increase its output while reducing its per-unit cost.
On the other hand, if the firm is producing at a point to the right of the intersection point, the MC is greater than ATC, and the ATC is increasing. This means that the firm is producing at a higher cost per unit of output and should reduce its output or find ways to lower its costs.
Conclusion
In conclusion, the relationship between the MC and ATC curves is important in determining the optimal level of production and pricing strategies for the firm. The intersection point of the MC and ATC curves is the minimum point of the ATC curve, and the firm should aim to produce at this point to achieve the lowest possible cost per unit of output.
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Which of the following is true of the relationship between the marginal cost function and the average cost functions?a)If MC is greater than ATC, then ATC is falling.b)The ATC curve intersects the MC curve at minimum MC.c)The MC curve intersects the ATC curve at minimum ATC.d)If MC is less than ATC, then ATC is increasing.Correct answer is option 'C'. Can you explain this answer?
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Which of the following is true of the relationship between the marginal cost function and the average cost functions?a)If MC is greater than ATC, then ATC is falling.b)The ATC curve intersects the MC curve at minimum MC.c)The MC curve intersects the ATC curve at minimum ATC.d)If MC is less than ATC, then ATC is increasing.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is true of the relationship between the marginal cost function and the average cost functions?a)If MC is greater than ATC, then ATC is falling.b)The ATC curve intersects the MC curve at minimum MC.c)The MC curve intersects the ATC curve at minimum ATC.d)If MC is less than ATC, then ATC is increasing.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is true of the relationship between the marginal cost function and the average cost functions?a)If MC is greater than ATC, then ATC is falling.b)The ATC curve intersects the MC curve at minimum MC.c)The MC curve intersects the ATC curve at minimum ATC.d)If MC is less than ATC, then ATC is increasing.Correct answer is option 'C'. Can you explain this answer?.
Which of the following is true of the relationship between the marginal cost function and the average cost functions?a)If MC is greater than ATC, then ATC is falling.b)The ATC curve intersects the MC curve at minimum MC.c)The MC curve intersects the ATC curve at minimum ATC.d)If MC is less than ATC, then ATC is increasing.Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about Which of the following is true of the relationship between the marginal cost function and the average cost functions?a)If MC is greater than ATC, then ATC is falling.b)The ATC curve intersects the MC curve at minimum MC.c)The MC curve intersects the ATC curve at minimum ATC.d)If MC is less than ATC, then ATC is increasing.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following is true of the relationship between the marginal cost function and the average cost functions?a)If MC is greater than ATC, then ATC is falling.b)The ATC curve intersects the MC curve at minimum MC.c)The MC curve intersects the ATC curve at minimum ATC.d)If MC is less than ATC, then ATC is increasing.Correct answer is option 'C'. Can you explain this answer?.
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