When The Average Total Cost Curve Is Downward Sloping?

by | Last updated on January 24, 2024

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The average

fixed costs

AFC curve is downward sloping because fixed costs are distributed over a larger volume when the quantity produced increases. AFC is equal to the vertical difference between ATC and AVC. Variable returns to scale explains why the other cost curves are U-shaped.

When the average total cost curve is downward sloping what must be true about the marginal cost curve?

When the average total cost curve is downward-sloping, what must be true about the marginal cost curve?

It is U-shaped

. It is a straight line. It is upward-sloping.

When the average variable cost curve is upward sloping?

The average variable cost curve lies below the average total cost curve and is typically

U-shaped

or upward-sloping. Marginal cost (MC) is calculated by taking the change in total cost between two levels of output and dividing by the change in output. The marginal cost curve is upward-sloping.

When the average variable cost curve is upward sloping what must be true about the marginal cost curve quizlet?

When the average variable cost curve is upward sloping, what must be true about the marginal cost curve?

It is above the average variable cost curve

. economic profit considers implicit costs, which accounting profit does not. You just studied 80 terms!

When the marginal cost curve lies below the average total 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

.

Why does marginal product eventually diminish as units of labor are added quizlet?

Due

to the law of diminishing marginal returns

, the marginal product of an input will eventually diminish as more of the variable input is used.

Where would we find a firm’s minimum efficient scale of production?

The minimum efficient scale (MES) is

the point on the LRAC (long-run average cost) curve

where a business can operate efficiently and productively at the lowest possible unit cost.

Why is MC curve upward sloping?

Marginal cost is upward sloping

due to diminishing returns

.

What is short run average cost curve?

Short Run Average Costs. The normal shape for a short-run average cost curve is

U-shaped

with decreasing average costs at low levels of output and increasing average costs at high levels of output.

What is fixed cost curve?

Total fixed cost curve depicts

the relation between the total fixed cost of production and the level of output while other things being constant

. Since total fixed costs are fixed, the curve representing it, is a horizontal line.

Does average fixed costs diminish continuously as output increases?

Average

fixed costs diminish continuously as output increases

. … In economics, a firm earns a normal profit when its total revenue equals its total economic costs. True. If the marginal-cost curve lies below the average-variable-cost curve, the average-variable-cost curve must be falling.

When the average total cost curve is rising?

An increasing

marginal cost

curve intersects a U-shaped average cost curve at the latter’s minimum, after which the average cost curve begins to slope upward. For further increases in production beyond this minimum, marginal cost is above average costs, so average costs are increasing as quantity increases.

Which of the following must be true if the marginal cost curve is rising?

If the marginal cost curve is rising, which of the following must be true?

Total costs must be rising

.

What is total cost curve?

TOTAL COST CURVE: A

curve that graphically represents the relation between the total cost incurred by a firm in the short-run production of a good or service

and the quantity produced.

When AC is rising then MC is?

When MC is equal to AC, i.e. when MC and AC curves intersect each other at point A, AC is constant and at its minimum point. 3. When MC is more than AC, AC rises with increase in output, i.e.

from 5 units of output

.

Where does the marginal cost curve lie?

lies

always below the average total cost curve (ATC)

.

Emily Lee
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Emily Lee
Emily Lee is a freelance writer and artist based in New York City. She’s an accomplished writer with a deep passion for the arts, and brings a unique perspective to the world of entertainment. Emily has written about art, entertainment, and pop culture.