draw avc,ac  and  mc curves in a single diagram .what relation do you observe among them?

Dear student,

AC is the cost of producing per unit of output.
AC = TC /X
AVC is the variable cost of producing per unit of output.
MC is the addition to total variable cost or total cost when one more unit of output is produced.
MC = △TVC / △X

Relation between AC, AVC and MC curves
* All AC, AVC and MC curve are U shaped due to law of variable proportion. 
* With increase in level of output the difference between AC and AVC decreases.
* AVC is derived from AC, as AC = ATC + AVC.
* MC and AC are derived from TC, as AC = TC /X and ​MC = △ TC / △X.
* Both AVC and MC are derived from TVC, as AVC = TVC / X and MC = △TVC / △X.
* When AVC and AC falls, MC is below them.
* When AVC and AC rise, MC is above them.
* When AVC is constant, MC=AVC.
* When AC is constant, MC = AC.



  • 3
  • 1
What are you looking for?