In the graph, MC cuts AVC at P and AC at Q. Which statement is correct? Short-run cost curves from the schedule. MC is 30, 20, 16, 14, 20, 32, 50 for the 1st to 7th unit, lowest at 14 for the 4th. AVC is 30, 25, 22, 20, 20, 22, 26, lowest at 20 for 4 and 5 units. AC (from 2 units) is 55, 42, 35, 32, 32, 34.57, lowest at 32 for 5 and 6 units. AFC falls from 30 at 2 units to 8.57 at 7. MC meets AVC at P (5 units, ₹20) and AC at Q (6 units, ₹32).

In the graph, MC cuts AVC at P and AC at Q.

Question 45

MediumOriginal question

In the graph, MC cuts AVC at P and AC at Q. Which statement is correct?

Short-run cost curves from the schedule. MC is 30, 20, 16, 14, 20, 32, 50 for the 1st to 7th unit, lowest at 14 for the 4th. AVC is 30, 25, 22, 20, 20, 22, 26, lowest at 20 for 4 and 5 units. AC (from 2 units) is 55, 42, 35, 32, 32, 34.57, lowest at 32 for 5 and 6 units. AFC falls from 30 at 2 units to 8.57 at 7. MC meets AVC at P (5 units, ₹20) and AC at Q (6 units, ₹32).

MC cuts both at their lowest points, from belowCorrect answerYour answerMC cuts both at their highest pointsCorrect answerYour answerMC cuts both from aboveCorrect answerYour answerMC never meets ACCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

P (5 units, ₹20) is the lowest AVC; Q (6 units, ₹32) is the lowest AC.
Below them MC is less than the average, pulling it down; above them MC is more, pulling it up.

Concept: MC and the minimum of the averages
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsThe shapes of the cost curves

Practise this chapter →

Ten questions from Cost Curves, at your own pace.

Practise this chapter →

Ten questions from Cost Curves, at your own pace.

In the graph, MC cuts AVC at P and AC at Q.

Question 45

Explanation