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When marginal cost (MC) is less than average total cost (ATC), it indicates that producing one more unit will lower the average cost of production. This typically leads to a decrease in ATC as output increases, as the additional units produced are cheaper than the average of the existing units. As a result, firms will have an incentive to increase production until MC equals ATC, which is the point of minimizing costs. This situation is often associated with economies of scale.
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Why does MC curve intersect AVC andATC fromits bottom?
The Marginal Cost (MC) curve intersects both the Average Variable Cost (AVC) and Average Total Cost (ATC) curves from below because when MC is less than AVC or ATC, it pulls the average down as additional units are produced. When MC equals AVC or ATC, it indicates that the cost of producing one more unit is exactly equal to the average cost, at which point the average costs are at their minimum. Thus, the intersection occurs at the lowest point of the AVC and ATC curves, illustrating the relationship between marginal and average costs.
The marginal cost mc curve always intersects the atc curve at its minimum point?
When marginal cost is below average total cost, the cost of an additional unit is lower than the average cost of all the units, so it causes average total cost to fall. If marginal cost is greater, the cost of an additional unit is higher, so average total cost will rise. So when they are equal, it will stay the same. Think of it like your GPA. Say ATC=your GPA (the average of all your grades), and MC=the grade in your next course (one particular grade). If you have a B average and get a C in your next course, your GPA will fall (like when MC is lower than ATC). If you have a B average and get an A, your GPA will rise (like when MC is higher than ATC). If you get a B in your next course, there won't be any change because it's the same as the average (like when ATC=MC).
In long-run equilibrium P equal minimum ATC equal MC. The equality of P and minimum ATC means the firm is achieving?
Productive efficiency.
Can the average costs rise while the marginal costs are declining?
MC is the change in Tc divide by change in quantity. MC will always be negatively sloped and ATC has positively sloped.
Why do MC intersect AVC and ATC from its bottom?
http://learning.mazoo.net/archives/000873.html Here's a helpful discussion of your question.
Does a monopoly firm always make profit?
NO, it depends on where the ATC (avg total cost) intercepts the MC (Marginal Cost)
In long run equilibrium P equals minimum ATC equals MC what is the significance of the equality of P and minimum ATC for society?
There are only normal profits in the market, so no firms will enter or exit the market.
What can happen if the MRP is greater than a firm's MC?
The firm can afford to hire more workers.
When the average total cost is at its minimum is it greater than MC equal to MC or smaller than MC?
Equal to MC.
When did MC Groovz Dance Craze happen?
MC Groovz Dance Craze happened in 2004.
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
What happens when marginal cost exceeds average total cost?
MC is the cost of producing one extra good, so if the cost of producing that one extra good is above the average, then the ATC increases.
