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The average cost curve is at its lowest point when a firm achieves optimal production efficiency, where the average total cost (ATC) per unit of output is minimized. This point typically corresponds to the scale of production where the marginal cost (MC) equals the average cost (AC). At this juncture, the firm is effectively utilizing its resources, and any increase or decrease in production would result in higher average costs. This concept is crucial for firms in determining the most efficient scale of operation.
What else can I help you with?
Does marginal cost curve always intersect the average cost curve at the average cost curve's lowest point?
When the marginal cost is below the average total costs or the average variable costs,then the AC would be declining.When marginal cost is above the average cost then the average cost would be increasing.Therefore the marginal cost should intersect with the average cost at the lowest point in order to pull the average cost upwards.
Why the marginal cost curve always cut the average cost curve at its lowest point?
This is because if a marginal figure is less than an average figure, the new average figure will decrease.
At what point does the marginal cost (MC) curve intersect the average variable cost (AVC) curve?
The marginal cost (MC) curve intersects the average variable cost (AVC) curve at the minimum point of the AVC curve.
What is the lowest point on a firms short run supply curve?
The minimum is price=average cost below this price supply=0
Why doe the marginal cost curve go through the lawest point of average cost curve?
as the total average cost is U shape the MC will intersect with U shape at lowest point to indicate the break even point where the company does not make neither profit nor loss. and this minimum point is known as the efficient scale that minimize the losses but does not maximize profit
Does marginal cost curve always intersect the average cost curve at the average cost curve's lowest point?
When the marginal cost is below the average total costs or the average variable costs,then the AC would be declining.When marginal cost is above the average cost then the average cost would be increasing.Therefore the marginal cost should intersect with the average cost at the lowest point in order to pull the average cost upwards.
What is the relationship between marginal cost and average cost curves?
Margianal cost curve crosses the average total cost curve at the lowest point on the average total cost curve to be socially and ecomonical efficient.
Why the marginal cost curve always cut the average cost curve at its lowest point?
This is because if a marginal figure is less than an average figure, the new average figure will decrease.
At what point does the marginal cost (MC) curve intersect the average variable cost (AVC) curve?
The marginal cost (MC) curve intersects the average variable cost (AVC) curve at the minimum point of the AVC curve.
What is the lowest point on a firms short run supply curve?
The minimum is price=average cost below this price supply=0
Why doe the marginal cost curve go through the lawest point of average cost curve?
as the total average cost is U shape the MC will intersect with U shape at lowest point to indicate the break even point where the company does not make neither profit nor loss. and this minimum point is known as the efficient scale that minimize the losses but does not maximize profit
Why does MC cut average cost curve?
The marginal cost (MC) curve cuts the average cost (AC) curve at its lowest point because when MC is less than AC, producing an additional unit lowers the average cost. Conversely, when MC is greater than AC, producing an additional unit raises the average cost. Therefore, the intersection point signifies the minimum average cost, where the cost of producing one more unit neither increases nor decreases the average cost. This relationship is fundamental in understanding production efficiency in economics.
What is the lowest point on average total cost?
The lowest number. An average would be somewhere around the middle.
The long run average total cost curve?
The long run average total cost curve is the lowest average total cost for producing each level of output. It depicts the per unit cost of producing a good or service in the long run when all inputs are variable.
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?
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.
What is the relationship between long-run average cost curve and short-run average cost curve?
what is the relationship between long run average cost curve and short run average cost curve?
How is a long-run average cost curve different from a short-run average cost curve?
The long-run average cost curve is longer.
