The average and marginal cost curves are _______________.

Saucer shaped curves

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L-shaped curves

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U-shaped curves

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None of them

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Solution

The correct option is B U-shaped curves
1:The average variable cost curve lies below the average total cost curve and is typically U-shaped or upward-sloping.
2: The Marginal Cost curve is U shaped because initially when a firm increases its output, total costs, as well as variable costs, start to increase at a diminishing rate

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Similar questions

Suppose that a firm's total fixed cost is Rs. 100, and the marginal cost schedule of a firm is the following :

$\begin{matrix} Output (in units) & 1 & 2 & 3 & 4 & 5 & 6 & 7 Marginal cost (in Rs) & 10 & 20 & 30 & 40 & 50 & 60 & 70 \end{matrix}$

(i) Is the MC curve U-shaped ?

(ii) Derive the AVC schedule. Will the AVC curve U-shaped ? Discuss.

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