Question
Draw Average Variable Cost (AVC), Average Total Cost (ATC) and Marginal Cost (MC) curves in a single diagram. State the relation between MC curve and AVC and ATC curves.
✓
Answer
Relation between MC curve and AVC and ATC curves:
- When MC is lower than ATC or AVC, then ATC or AVC falls.
- When MC = ATC or AVC, then ATC or AVC is constant. (MC curve intersects both the AVC curve and ATC curve at their minimum points, (l and m) from below.
- When MC is greater than ATC or AVC, then ATC or AVC rises.
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.
Explore more
Similar questions
Why does marginal cost eventually rise as output increases?
At a price of 40 per unit, the quantity supplied of a commodity is 400 units. When its price falls by 10 percent, its quantity supplied falls by 36 units. Calculate its elasticity of supply. Is its supply elastic?
Suppose a bond promises Rs. 500 at the end of two years with no intermediate return. If the rate of interest is 5 per cent per annum what is the price of the bond?
There are three firms A, B and C in a market. The supply schedule for the market and that for firms A and B is given below. Prepare the supply schedule for firm C.
| Price(₹) | Supply of Firm A | Supply of Firm B | Supply of Firm C | Market Supply MS = SA + SB + SC |
| 10 | 0 | 25 | -- | 35 |
| 20 | 10 | 30 | -- | 60 |
| 30 | 20 | 35 | -- | 85 |
| 40 | 30 | 40 | -- | 110 |
| 50 | 40 | 45 | -- | 135 |
| 60 | 50 | 50 | -- | 160 |
Calculate MC and TC from the following cost schedule of a firm whose total fixed cost is ₹ 15.
| Output (Units) | 1 | 2 | 3 | 4 |
| Marginal Cost (₹) | 10 | 19 | 29 | 40 |
A consumer consumes only two goods A and B and is in equilibrium. Show that when price of good B falls, demand for B rises. Answer this question with the help of utility analysis.
Given below is the cost schedule of a firm. Its total fixed cost is Rs.120. Calculate the marginal cost and average variable cost at each level of output.
| Output (Units) | 1 | 2 | 3 |
| Average Cost (₹) | 160 | 96 | 80 |
From the following schedule, calculate TR, AR and MR.
| Price (P) (₹) | 6 | 7 | 8 |
| Units sold (Q) | 5 | 4 | 3 |
Explain the role of reverse repo rate in controlling money supply.
Distinguish between ‘fiscal deficit’ and ‘revenue deficit’. What does fiscal deficit indicate?