The figure given below shows cost curves of a firm. Figure: 7.2
- In the figure,
|: Marginal cost curve
||: Average total cost curve
|||: Average variable cost curve
Refer to Figure 7.2.At an output level of G:
A)both average total cost and average variable cost are falling.
B)average fixed cost is equal to the distance JK.
C)average variable cost exceeds marginal cost by the amount LJ.
D)average total cost exceeds marginal cost by the amount KJ.
E)total cost is equal to the area 0AJG.

Question

The figure given below shows cost curves of a firm. Figure: 7.2 
- In the figure,
|: Marginal cost curve
||: Average total cost curve
|||: Average variable cost curve
Refer to Figure 7.2.At an output level of G:
A)both average total cost and average variable cost are falling. 
B)average fixed cost is equal to the distance JK. 
C)average variable cost exceeds marginal cost by the amount LJ. 
D)average total cost exceeds marginal cost by the amount KJ. 
E)total cost is equal to the area 0AJG.

Quizplus · Accepted Answer

At output level G, both average total cost and average variable cost are falling because the marginal cost curve is below both the average total cost curve and the average variable cost curve.

The Figure Given Below Shows Cost Curves of a Firm