Example on relationship between marginal and average cost, Managerial Economics

Assignment Help:

Q. Example on Relationship between marginal and average cost?

This relationship between marginal and average cost can easily be recalled with the aid of Fig. below. It can be seen from figure that so long as MC is below AC, average cost falls which is, MC pulls AC downwards. When MC is above AC, average cost rises, which is, MC pulls AC upwards. When MC equals AC, average cost remains constant, which is, MC pulls AC horizontally. Arrows show the direction of these pulls.

245_Example on Relationship between marginal and average cost.png

Average and marginal cost

It is to be noted that a rising MC curve also cuts AVC curve at its lowest point. Reason for this is exactly the same as that we have given above to elucidate why MC cuts AC at its minimum point.


Related Discussions:- Example on relationship between marginal and average cost

Effect on a consumer''s equilibrium, Problem: (a) Explain with the help...

Problem: (a) Explain with the help of a diagram, the effect on a consumer's equilibrium, of an increase in the price of commodity X while the consumer's money income and price

Domestic workers to domestic firms, Labor demand for low-skilled workers in...

Labor demand for low-skilled workers in the United States is w= 24 -0.1E where E is the number of workers (in millions) and w is the hourly wage. There are 120 million domestic U.S

Coefficient on education, Let Consider the following (familiar) equation wh...

Let Consider the following (familiar) equation which estimates the number of hours of sleep / year  that someone gets as a function of hours worked / year (total work), education (

Explain the theory of production, Explain the Theory of Production Co...

Explain the Theory of Production Cost and Production analysis is central for the unhampered functioning of the production process and for project planning. Production is an e

Explain about the marginal analysis, Explain about the marginal analysis. ...

Explain about the marginal analysis. The optimal quantity of an activity is the level which produces the maximum probable total net gain. The principle of marginal analysis

How is marginal analysis lead to profit-maximizing quantity, How is margina...

How is marginal analysis lead to profit-maximizing quantity of output? Marginal Analysis leads to Profit-Maximizing Quantity of Output: The price-taking firm’s optimal outpu

A monopolist faces a straight line demand curve which passes, A monopolist ...

A monopolist faces a straight line demand curve which passes through the point Rs 10 per ton on the price-cost axis and through the point 8000 tons on the quantity axis. The fir

Quantity demanded and supplied , a.  A major freeze destroys a large number...

a.  A major freeze destroys a large number of orange trees in Florida Ans- Since the freeze destroyed a large number of orange trees in Florida the number of oranges the selle

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd