In the graph, between 4 and 5 units, MC rises from ₹14 to ₹20 while AVC stays at ₹20. What does that show? 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, between 4 and 5 units, MC…

In the graph, between 4 and 5 units, MC rises from ₹14 to ₹20 while AVC stays at ₹20.

Question 55

MediumOriginal question

In the graph, between 4 and 5 units, MC rises from ₹14 to ₹20 while AVC stays at ₹20. What does that show?

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).

AVC is risingCorrect answerYour answerMC is fallingCorrect answerYour answerThe 5th unit costs exactly the average, so AVC does not changeCorrect answerYour answerFixed cost has changedCorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

The 5th unit's MC is ₹20, equal to AVC, so adding it leaves the average at ₹20.
This is the bottom of AVC, where MC crosses it.

Concept: MC equal to AVC
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, between 4 and 5 units, MC rises from ₹14 to ₹20 while AVC stays at ₹20.

Question 55

Explanation