As we observe the cost curves graph, we see that the
A) MC constantly falls as output increases.
B) ATC curve always has a negative slope.
C) MC curve cannot be U-shaped.
D) MC curve intersects the ATC curve at its maximum.
E) MC curve intersects the AVC curve and ATC curve at their minimums.

Question

Quizplus · Accepted Answer

The statement that the MC curve intersects the AVC curve and ATC curve at their minimums is true according to the cost curves graph. Option A is incorrect because the MC curve can increase at higher output levels due to diminishing returns. Option B is incorrect because the slope of the ATC curve may vary depending on the production level. Option C is incorrect because the MC curve can be U-shaped in cases where economies of scale are followed by diseconomies of scale. Option D is incorrect because the MC curve intersects the ATC curve at its minimum, not maximum.

As We Observe the Cost Curves Graph, We See That