What is the relationship between marginal cost curve and average variable cost curve?

What is the relationship between marginal cost curve and average variable cost curve?

The marginal cost curve intersects both the average variable cost curve and (short-run) average total cost curve at their minimum points. When the marginal cost curve is above an average cost curve the average curve is rising. When the marginal costs curve is below an average curve the average curve is falling.

What is the relationship between marginal and average cost curves and why do they intersect at AC’s minimum point?

When the MC is smaller the AC, the AC decreases. This is because when the extra unit of output is cheaper than the average cost then the AC is pulled down. Similarly, when the MC is greater than the AC, the AC is pulled up. The point of intersection between the MC and AC curves is also the minimum of the AC curve.

What is the relationship between the marginal and average productivity curves and the marginal and average variable cost curves?

The relationship between the marginal cost and the average cost is that the marginal cost of producing a good will always intersect with the average cost curve at the minimum average cost. Thus, this explains why the average cost is always decreasing at the portion where MCAC.

What is the relationship between marginal cost and variable cost?

Marginal costs measure the change in production expenses for making each additional item. Variable costs reflect the materials necessary to manufacture or make each product. As a result, the variable costs directly impact the marginal cost.

What is the relationship between marginal and average product?

Relationship between Average Product and Marginal Product When Average Product is rising, Marginal Product lies above Average Product. When Average Product is declining, Marginal Product lies below Average Product. At the maximum of Average Product, Marginal and Average Product equal each other.

What is the relation between marginal cost and average cost when average cost is constant?

If the average cost remains constant, marginal cost (MC) is equal to average cost (AC) because the AC curve reaches its lowest point.

What is the relationship between average and marginal product?

What is the relationship between the marginal product and the average product curves of a variable input?

The marginal product curve crosses the average product curve at the maximum of the average product curve. Marginal product focuses on the changes between production totals and the quantity of resources. Average product shows output at a specific level of input.

What is relationship between average product curve and marginal product curve?

The marginal product curve crosses the average product curve at the maximum of the average product curve. Marginal product focuses on the changes between production totals and the quantity of resources.

What is the relationship between average cost and marginal cost?

The relationship between Average Cost and Marginal Cost can be better illustrated through the following schedule and diagram, When MC is less than AC, AC falls with increase in output, i.e. till 3 units of output. AS MC becomes equal to AC, i.e. when MC curve intersects the AC curve, AC is constant and at its minimum point.

What is the shape of average total cost curve?

Diagrammatically the vertical summation of average fixed cost and average variable cost curves gives us the average total cost curve. The ATC curve is also an U-shaped curve. Marginal Cost (MC.)

Why does the marginal cost curve for most production processes slope upward?

In other words, the marginal cost curve for most production processes will eventually slope upward, as shown here. Because average cost includes fixed cost but marginal cost does not, it is generally the case that average cost is greater than marginal cost at small quantities of production.

Why does the average cost curve remain parallel to the horizontal axis?

Therefore, the curve MC remains above the curve AC. According to the law of constant returns when a firm employs more and more factors, output increases at a constant rate. Therefore, the average cost curve as well as marginal cost curve remains parallel to horizontal axis. This can be made clear with the help of diagram 13.