Question
Explain the relationship between Marginal Cost and Average Cost using diagram.
✓
Answer
Relationship between Marginal Cost (MC) and Average Cost (AC) is stated below:
- When AC falls, MC is lower than AC.
- When AC rises, MC is greater than AC.
- When AC is constant and minimum, MC is equal to AC.
- MC is always to the left of AC and cuts AC from its lowest point.
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Find out the marginal cost in:
|
Total Output
(Units)
|
Total Cost (Rs)
|
|
0
|
120
|
|
1
|
180
|
|
2
|
200
|
|
3
|
210
|
|
4
|
230
|
|
5
|
270
|
|
6
|
360
|