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

Mathematical approach to revenue and cost functions, A MATHEMATICAL APPROAC...

A MATHEMATICAL APPROACH TO REVENUE AND COST FUNCTIONS Recall that TR = P x Q This implies that P(AR) = TR                                     Q For example, assuming

Explain the term- takes the help of macroeconomics, Takes the help of macro...

Takes the help of macroeconomics Managerial economics incorporates certain aspects of macroeconomic theory. These are important to comprehending the circumstances and environme

Describe the managerial functions, Describe the Managerial functions A ...

Describe the Managerial functions A manager has to take numerous decisions that conform to the objectives of the firm. Several business decisions fall prey to conditions of ris

Equilibrium income, Equilibrium Income In this model, aggregate desire...

Equilibrium Income In this model, aggregate desired expenditure has three components:  Consumption, Investment and Government Expenditure:

Monopolistic practices, MONOPOLISTIC PRACTICES The following practices...

MONOPOLISTIC PRACTICES The following practices may be said to characterize monopolies. Exclusive dealing to supply and collective boycott Producers agree to supply onl

Increemental principle, asumption and limitation of increemrntal,oppurtunit...

asumption and limitation of increemrntal,oppurtunity cost

Gatt & wto, introduction, evaluation,principle, activities concept behind G...

introduction, evaluation,principle, activities concept behind Gatt & wto

MANAGEMENT INFORMATION SYSTEMS, Write a detailed note on the planning and d...

Write a detailed note on the planning and development of Management Information Systems

Central bank, CENTRAL BANK A modern central bank performs so many funct...

CENTRAL BANK A modern central bank performs so many functions of different nature that it is difficult to give any brief yet accurate definition of a central bank. Any definiti

Oligopoly theory, in the context of oligopoly theory explain the channels v...

in the context of oligopoly theory explain the channels via which either a cost reduction or a quantity increase influence a supplier''s profitability

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