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Chapter 22: Q.1 - For Critical Thinking (page 505)

If short-run average variable costs and marginal costs decline at every feasible quantity of output, what (if anything) happens to the positions of the AVC, AFC, ATC, and MC curves? Explain.

Short Answer

Expert verified

The positions will change accordingly

Step by step solution

01

Given Information

Short-run average variable costs and marginal costs decline at every feasible quantity of output

ATC curve will decline as the proper expense would be dispersed over an enormous number of items.

02

Explanation

The marginal cost curve will decline first and afterwards, will go to a limited extent where it will then meet the normal all-out cost and normal variable expense curves at their base places.

AVC curve will fall yet not as MC cost curve, comparatively MC curve will go up however not quite so much as the minor expense curve.

As extra units are created AFC curves will decline and will keep on declining.

At first, ATC curve will decline as the proper expense would be dispersed over an enormous number of items, yet because of the pattern of consistent, unavoidable losses, this will go up like the MC cost curve.

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