What is marginal cost curve, Managerial Economics

Assignment Help:

Q. What is Marginal cost curve?

MC curve is also 'U' shaped as in Figure below. Marginal cost curve falls initially but then reaches a minimum point and lastly rises. Shape of the MC curve is determined by the law of variable proportions, which is, by the behaviour of the marginal product of variable factor. MC curve intersects AVC and AC curves at their minimum. This is because of the important relationship between average and marginal costs.

The relationship betweenATC, AVC and MC can be summarised as below:

  • MC, ATC and AVC fall first afterwards reach a minimum and finally rise as output increases.
  • Rate of change in MC is greater than AVC and consequently the MC is lowest at an output lower than output at which AVC is lowest.
  • ATC falls for a longer range of output than AVC and so the minimum ATC is at a larger output than minimum AVC.
  • MC = AVC, when AVC is lowest.
  • MC = ATC, when ATC is minimum.

 


Related Discussions:- What is marginal cost curve

Fixed costs (fc), Fixed Costs (FC) These are costs which do not   vary...

Fixed Costs (FC) These are costs which do not   vary with the level of production i.e. they are fixed at all levels of production.  They are associated with fixed factors of p

Determine the specific place of demand, Determine the Specific Place of dem...

Determine the Specific Place of demand The demand should relate to a specific market as well. For instance, every year in the town of Dehradun, demand for school bags is 4,000

Externality in economics, Explain the concept of externality in economics? ...

Explain the concept of externality in economics? Give one example of a positive and a  negative externality in Australia.

Buffer stocks and stabilization funds - stabilize farm price, Buffer stocks...

Buffer stocks and stabilization funds In this case the government buys up part of the supply when output is excessive, stores this surplus, and resells it to consumers in time

The law of diminishing returns (law of variable proportions), THE LAW OF DI...

THE LAW OF DIMINISHING RETURNS  (LAW OF VARIABLE PROPORTIONS) One of the most important and fundamental principles involved in economics called the law of diminishing return

Frugal economy, The Frugal Economy In the Frugal economy, households a...

The Frugal Economy In the Frugal economy, households and firms look to the future, and as a result undertake both Saving and Investment. SAVING Saving is income no

Elasticity of price expectation, in the context of an environment of busine...

in the context of an environment of business,state briefly the implication of (1) Ee>1.....(2)Ee=1......(3)Ee=0.......(4)Ee

Perfectly elastic supply, Perfectly Elastic Supply Supply is said to b...

Perfectly Elastic Supply Supply is said to be perfectly or infinitely elastic if the price is fixed at all levels of demand.  The demand curve has been shown in the above diag

Mba assignment, what is the role of managerial economics in running a busin...

what is the role of managerial economics in running a business?

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