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Basic Question 19 of 29
Which statement(s) is (are) true?
II. Where AVC is rising, MC is above AVC.
III. At the minimum AVC, MC equals AVC.
I. Where AVC is falling, MC is below AVC.
II. Where AVC is rising, MC is above AVC.
III. At the minimum AVC, MC equals AVC.
User Contributed Comments 5
| User | Comment |
|---|---|
| bdaguy | I'm not sure why (I) is included here. At low levels of production, AFC is very high which means that MC is also very high and may exceed AVC. |
| bdaguy | Ignore my comments. Fixed costs do not contribute to MC as each new unit is produced. |
| Mariecfa | MC intersects AVC at its minimum point. The intersection comes from below, which MC is less than AVC, respectively, AVC is decreasing. Also when MC exceeds AVC, respectively, AVC is increasing. |
| DonAnd | Take a look at the cost curve diagram in the notes...it makes it all clearer |
| choas69 | the trick is to remember (lll) where at minimum of AVC, MC crosses from below to above. |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
determine and interpret break even and shutdown points of production, as well as how economies and diseconomies of scale affect costs under perfect and imperfect competition
CFA® 2024 Level I Curriculum, Volume 1, Module 1.