I don't understand the relation between AC and MC or AP and MP

Especially the part where it says when MC > AC or MC < AC etc..

Please help me out :D

In order to understand the relationship between AC and MC or AP and MP, you need to understand the characterstics of the marginal and the average component which are as follows. 

  1. The marginal component (MC or MP) always rises faster than the average component (AC or AP). That is, the rate of increase in the marginal component is higher than that of the average component.
  2. Also, the marginal component (MC or MP) always falls faster than the average component (AC or AP).That is, the rate of  fall of the marginal component is higher than that of the average component.

Keeping in mind the above two points the following relationship can be observed between MP and AP

  • MP rises at a faster rate than AP and reaches its maximum point faster than AP.
  • MP falls faster than AP and becomes zero before AP.  

A similar relation can be observed between AC and MC as follows.

  • When AC is falling, MC falls at a faster rate and reaches its minimum point earlier than AC.
  • When AC is rising, MC rises at a faster rate and remains above AC.

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