The marginal cost curve intersects the average variable cost curve at point A. Then, point A is the point where .

AVC is minimum

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AFC is maximum

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SAC is minimum

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AVC = 0

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Solution

The correct option is A AVC is minimum
The SMC curve intersects the AVC curve when AVC is minimum.

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Similar questions

Draw average total cost, average variable cost, and marginal cost curves in a single diagram. Also, explain the relationship between ATC and AVC.

Explain the relation between (i) ATC and AVC and (ii) MC and AVC.

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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