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When average total cost curve is falling it is necessarily above the marginal cost curve. If the average total cost curve is rising, it is necessarily below the marginal cost curve.

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โˆ™ 2010-10-17 13:57:16
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Q: 6 If the average total cost curve is falling what is necessarily true of the marginal cost curve If the average total cost curve is rising what is necessarily true of the marginal cost curve?
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Why does the marginal cost curve cut through the average variable cost curve exactly at the minimum of the average variable cost curve?

Marginal cost curve cuts average cost (variable or total cost) at its minimum simply to portray the law of variable proportions. The idea is as labor is increased with capital being fixed, productivity increases upto a point and then decreases and later becomes negative. To relate the same productivity with average cost function, the average cost first decreases , reaches a minimum and then increases. Now marginal cost is just a change in the total cost. Logic says that when MC is less than AC productivity is favourable, thus cost is falling. When MC is more than AC productivity is not favourable and thus the rising portion of the cost curve. When MC = AC , the productivity that was reducing the average cost per unit has maximized and from then on starts rising cost(or decreasing productivity). That is the only point where they can intersect.

Which of the following is happening when the GDP is neither rising nor falling?


Why short run average cost curve is U shaped?

The family of short-run cost curves consisting of average total cost, average variable cost, and marginal cost, all of which have U-shapes. Each is U-shaped because it begins with relatively high but falling cost for small quantities of output, reaches a minimum value, then has rising cost at large quantities of output. Although the average fixed cost curve is not U-shaped, it is occasionally included with the other three just for sake of completeness.

Which othe following is happening when the GDP is neither rising nor falling?


Falling demand rising debt were a problem for which sector of the economy in the 1920?


Related questions

Draw a diagram with marginal product and average productExplain the relationship between marginal product and average product?

Marginal product is any input in the production process is the increase in the quantity of output obtained from on additional unit of the input. Average product is the output produced when one more unit of the variable factor is employed The relationship is state as: If labour's marginal product is exceed its average product that means labour's average product will be rising. Labour's average product will be falling. If labour's marginal product is less than its average product. If labour's marginal product is equal its average product and the average product will reach the minimum value at the point.

When total product is rising both average product and marginal product must also be rising true or false?

that will be false! hope this helps!

What is rising and falling?

down is falling rising is up

What is rising falling?

down is falling rising is up

What are the rising and falling intonation symbol?

i.e symbol to rising and falling intonation

When do we used rising and falling intonation?

Rising intonation is used before the climax and falling intonation is used after the climax. Rising intonation Did you turn it on? Falling intonation How was your day?

Does falling action come after rising action?

no, climax come after rising action and then falling action.

What does the slope of the supply curve reflect?

Rising Marginal Costs

Are health-care costs rising or falling?


Is the air in the cente of the cyclones rising or falling?

it is rising

Where will you apply marginal costing?

Marginal costing is the ascertainment of cost of one extra unit to be prepared or manufactured. Basically thee formula is- (Marginal Cost)n = (Total Cost)n - (Total Cost)n-1 for nth item . Through marginal costing we can ascertain whether our cost of production is rising, falling or constant and thus it helps in formation of a strategic plan for the enterprise.

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