Question

Q.13 - Explain the relationship between AC and MC with the help of a diagram​

Answer 1

Answer:

(i) When MC is less than AC, AC falls with an increase in output. i.e. till 3 units of output.

(ii) When MC ¡s equal to AC, i.e., when MC and AC curves intersect each other at point A, AC is constant and it’s a minimum point.

(iii) When MC is more than AC, AC rises with an increase in output, i.e., from 5 units of output.

(iv) Thereafter, both AC and MC rise, but MC increases at a faster rate as compared to AC. As a result, the MC curve is curved.