If both average cost (AC) and marginal cost (MC) are U shaped, then

AC will reach a minimum at a level of output that is less than that at which MC reaches a minimum.

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the total cost curve will be a straight line.

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AC will reach a minimum at a level of output that is greater than that at which MC reaches a minimum.

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both AC and MC will reach a minimum at the same level of output.

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Solution

The correct option is C AC will reach a minimum at a level of output that is greater than that at which MC reaches a minimum.

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Similar questions

Q. If total cost function is given by

C = a + b x + c x^{2}

, where x is the quantity of output show that

\frac{d}{d x} (A C) = \frac{1}{x} (M C - A C)

, where MC is the marginal cost and AC is the average cost.

Q. The average cost function,

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for a commodity is given by

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