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

Weston Industrial Manufacturing Products ("WIMP") has the ca, I would like ...

I would like to get the answer to the question - Weston Industrial Manufacturing Products ("WIMP") has the capability to produce a variety of industrial products, including a numb

Measuring point elasticity on a non-linear demand curve, Measuring Point El...

Measuring Point Elasticity on a Non-linear Demand Curve Let's now explain the method of measuring point elasticity on a non-linear demand curve. Assume we want to measure the

Comprehesive Compectitive Impact Summary U.S. retail firm, U.S. retail indu...

U.S. retail industry, Arc Elasticity is correctly used to assess the dollar magnitude of net benefits of a decision to raise price/output combinations by 5% in the short and medium

Individual firm and market supply curves, Individual firm and market supply...

Individual firm and market supply curves The quantities and prices in the supply schedule can be plotted on a graph. Such a graph is called the firm supply curve. A fir

What is oligopoly, What is Oligopoly? Oligopoly is a general market str...

What is Oligopoly? Oligopoly is a general market structure. This arises from similar forces that lead to monopoly, except within weaker form. This is an industry along with onl

Morris model, explain critically growth maximisation model of morris ?

explain critically growth maximisation model of morris ?

Explain about utility analysis, Q. Explain about Utility analysis? A su...

Q. Explain about Utility analysis? A subset of consumer demand theory which analysis consumer behaviour and market demand employing marginal utility and total utility. Key prin

Describe about regression analysis, Describe about regression analysis ...

Describe about regression analysis An illustration from the automobile industry is befitting for explaining the forecasting method that uses simple regression analysis. Let's p

Keynesian unemployment, Keynesian unemployment According to Keynesian ...

Keynesian unemployment According to Keynesian theory of income and employment, unemployment occurs due to lack of effective demand. If effective demand is less, production of

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