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

Supply of money, The supply of money Refers to the total amount of mon...

The supply of money Refers to the total amount of money in the economy. Most countries of the world have two measures of the money stock - broad money supply and narro

Stable and unstable equilibrium, Stable and Unstable Equilibrium An eq...

Stable and Unstable Equilibrium An equilibrium is said to be stable equilibrium when economic forces tend to push the market towards it.  In other words, any divergence from t

Show the williamson''s approach for team production, For Oliver E. Williams...

For Oliver E. Williamson, existence of firms derives from 'asset specificity' in production, where assets are specific to each other such that their value is much less in a second-

Example on relationship between marginal and average cost, Q. Example on Re...

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 s

Ppf, What is producer surplus? “The more the competition among the sellers,...

What is producer surplus? “The more the competition among the sellers, the less the producer surplus enjoyed by the producers” – do you agree with the statement. Justify your answe

Voluntary monopoly through combinations, To eliminate competition and there...

To eliminate competition and thereby secure higher prices, firms producing a specific product can come together and make monopoly agreements. These are called as industrial combina

Qt, applicatiopn of qt in managerial decision making

applicatiopn of qt in managerial decision making

Eceonomic therios, Ask questiHow does economic theory contribute to manager...

Ask questiHow does economic theory contribute to managerial decisions? on #Minimum 100 words accepted#

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