Margianal cost curve crosses the average total cost curve at the lowest point on the average total cost curve to be socially and ecomonical efficient.
The cost curves best tells us the relationship between the marginal cost and average total cost. The average fixed cost (AFC) curve will decline as additional units are produced, and continue to decline.
The type of relationship that you postulate between short-run and long-run average cost curves that is not U shaped is the external limiting relationship.
The Marginal Cost (MC) curve intersects both the Average Variable Cost (AVC) and Average Total Cost (ATC) curves from below because when MC is less than AVC or ATC, it pulls the average down as additional units are produced. When MC equals AVC or ATC, it indicates that the cost of producing one more unit is exactly equal to the average cost, at which point the average costs are at their minimum. Thus, the intersection occurs at the lowest point of the AVC and ATC curves, illustrating the relationship between marginal and average costs.
what kind of relationship would you postulate between short run and long run average cost curves when these are not u shaped as suggested by the modern theories.
what kind of relationship would you postulate between short run and long run average cost curves when these are not u shaped as suggested by the modern theories.
Yes, there is a relationship between the marginal revenue curve and the demand curve. For a monopolistic firm, the marginal revenue curve lies below the demand curve because the firm must lower the price on all units sold to sell additional units, resulting in diminishing marginal revenue. In contrast, for a perfectly competitive firm, the marginal revenue curve is horizontal and coincides with the demand curve, as the firm can sell any quantity at the market price without affecting it. Thus, while the two curves are related, their positions and shapes differ based on the market structure.
Marginal Benefit curve is usually downward sloping, while Marginal Cost is usually upward sloping.
Because in Pure Competition, Demand equals Price, and Price equals Marginal Revenue;hence, Demand equals Marginal revenue.
go ahead. Keep cheapening what a beautiful thing a committed relationship can be
Characteristics of Perfectly Competitive Market: Free entry / exit (no barriers to entry) Firms produce homogenous products There is perfect knowledge of the market Many Seller and Buyers Seller is a passive price taker Marginal Revenue Curve = Average Revenue = Price = Demand Curve for individual firm. The curve is constant Marginal Cost Curve intersects both Average Variable Cost and Average Total Cost curves at their minimum point Profit Maximisation output level is when MR = MC (find intersect point and draw line down to Q axis)
The product establishes the cost curve or the relationship between costs and outputs. Costs are influenced by the need and function of a certain product.
The shape of the short-run total cost (TC), average cost (AC), and marginal cost (MC) curves in a firm is influenced by the law of diminishing marginal returns, which occurs when adding more of a variable input (like labor) to a fixed input (like machinery) leads to smaller increases in output. Initially, costs may decrease as production increases due to efficiencies, but eventually, costs rise as additional inputs yield less output. Fixed costs shape the AC curve, while variable costs influence both AC and MC curves. The interplay of these factors creates U-shaped curves for AC and MC, reflecting the initial decline and subsequent rise in costs.