Behind the Supply Curve: Input and costs - Two key concepts: Marginal Cost and Average Cost - Minimum Average Total cost
3 important questions on Behind the Supply Curve: Input and costs - Two key concepts: Marginal Cost and Average Cost - Minimum Average Total cost
Why does the ATC have a U shaped ATC think of a point
Because the ATC is at its minimum level
What two points cross each other at the bottom of U in the ATC?
It is the level of output at which marginal cost crosses the average total cost curve from below
What 3 general principles explain why the MC crosses the ATC from below?
At the minimum-cost output, the average total cost is equal to the marginal cost.
At output less than the minimum-cost output, MC is less than ATC but ATC is falling
At output greater than the minimum cost output, MC is greater than ATC and ATC is rising
At output less than the minimum-cost output, MC is less than ATC but ATC is falling
At output greater than the minimum cost output, MC is greater than ATC and ATC is rising
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