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Overall because of diminishing marginal returns. The marginal cost curve, MC, decreases until diminishing marginal returns set in and and it begins to increase. When the MC is below the AVC, the AVC must fall. When the MC is above the AVC, the AVC must rise. In otherwords, if the marginal cost is decreasing the average cost must be decreasing as well and vice versa.
Kylee Homenick
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What happens to marginal cost after the point where it equals average variable cost?
Marginal Cost will keep increasing (have upward slope) because of the principle of diminishing marginal returns. The MC curve above the its intersection with AVC is the Supply Curve *because below minimum AVC, the firms stops production)
True or false. The U shape of the long-run ATC curve is the result of diminishing returns?
False
How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
What is modern theory of cost of production?
the traditional theory explains cost curve u shape, but in modern theory says that cost curve L shape
What is shape of indifference curve?
what will be the shape of indifference curve if one of the two goods is a free commodity
Why does the minimum point of avc curve lie to the right of minimum point of mc curve?
AVC=AC-AFC,the AVC curve is simply the vertical difference between the AC and AFC curve, AFC gets less, the gap between AVC andAC narrows.since all marginal costs are variable ,the same relationship holds between MC and AVC as it did between MC and AC ,that is ,when MC is less than AVC ,it must be falling, if MC is greater than AVC .it must be rising, so ,as with the AC curve ,the MC curve crosses the AVC curve at its minimum point
Why is the cost curve U shape?
because sophie went to Nigeria
Why is average total cost curve above average variable cost curve?
The Average Total Cost (ATC) curve is above the Average Variable Cost (AVC) curve because the ATC is composed of the AVC and the AFC (average fixed cost curve). The AVC curve starts out low at low levels of output, and eventually, as more of the variable unit is added, AVC begins to slop upward. Conversely, AFC starts out higher, but as more units are produced, the fixed costs are spread out over more units so the AFC curve is actually a downward sloping straight line. When you add the AVC and AFC at each level of production and graph the result, you are given the ATC line which is a U-shaped curve above the AFC & AVC. An example of VC would be labor. In the short-run where plant size is fixed, in order to produce more units, you would have to hire more labor. As you add workers, you will initially see a productivity gain, but as more and more workers are added, their marginal output will fall. FC is simple. Suppose you have a factory that costs you $100/year to operate. If you produce only 1 unit that year, your fixed costs are spread out over the single unit, so $100 AFC. Now suppose you up production to 3 units and AFC falls to $33.34/unit. Go even further and produce 25 units and now AFC is $4/unit. Graph this line. The sum of these 2 curves, AVC & AFC, equals ATC.
What happens to marginal cost after the point where it equals average variable cost?
Marginal Cost will keep increasing (have upward slope) because of the principle of diminishing marginal returns. The MC curve above the its intersection with AVC is the Supply Curve *because below minimum AVC, the firms stops production)
True or false. The U shape of the long-run ATC curve is the result of diminishing returns?
False
How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
What shape is a Cooling curve graph?
A Cooling curve graph changes shape.
What is modern theory of cost of production?
the traditional theory explains cost curve u shape, but in modern theory says that cost curve L shape
What is format for videos for a psp?
Mp4 mp4-avc avi-mjpge mp4-avc mp4-avc （720×480）pmp pmp-avc
What is shape of indifference curve?
what will be the shape of indifference curve if one of the two goods is a free commodity
What is the shape of demand curve in perfect competition?
The demand curve in a perfectly competitive market is U-shaped owing to the fact that as the economies of scale take effect average costs begin to lower down. Finally though, the diseconomies of scales take effect too thereby causing the average costs to go up hence creating a u-shape for the demand curve.
Explain 'u' shape of ac curve?
asthe current is continuosly changing in a uniform manner alternatively increasing and decreasing.
