The diagram below shows some short- run cost curves for a firm. FIGURE 7- 2
-Refer to Figure 7- 2. Which of the following choices correctly identifies the cost curves in part (ii) of the figure?
A) Curve 4 is the average total cost curve. Curve 5 is the marginal cost curve. Curve 6 is the average variable cost curve. Curve 7 is the average fixed cost curve.
B) Curve 4 is the marginal cost curve. Curve 5 is the average total cost curve. Curve 6 is the average variable cost curve. Curve 7 is the average fixed cost curve.
C) Curve 4 is the marginal cost curve. Curve 5 is the average variable cost curve. Curve 6 is the average fixed cost curve. Curve 7 is the average total cost curve.
D) Curve 4 is the marginal cost curve. Curve 5 is the average fixed cost curve. Curve 6 is the average variable cost curve. Curve 7 is the average total cost curve.
E) Curve 4 is the average fixed cost curve. Curve 5 is the average total cost curve. Curve 6 is the marginal cost curve. Curve 7 is the average variable cost curve.

Question

The diagram below shows some short- run cost curves for a firm.  FIGURE 7- 2
-Refer to Figure 7- 2. Which of the following choices correctly identifies the cost curves in part (ii) of the figure?
A) Curve 4 is the average total cost curve. Curve 5 is the marginal cost curve. Curve 6 is the average variable cost curve. Curve 7 is the average fixed cost curve. 
B) Curve 4 is the marginal cost curve. Curve 5 is the average total cost curve. Curve 6 is the average variable cost curve. Curve 7 is the average fixed cost curve. 
C) Curve 4 is the marginal cost curve. Curve 5 is the average variable cost curve. Curve 6 is the average fixed cost curve. Curve 7 is the average total cost curve. 
D) Curve 4 is the marginal cost curve. Curve 5 is the average fixed cost curve. Curve 6 is the average variable cost curve. Curve 7 is the average total cost curve. 
E) Curve 4 is the average fixed cost curve. Curve 5 is the average total cost curve. Curve 6 is the marginal cost curve. Curve 7 is the average variable cost curve.

Quizplus · Accepted Answer

Curve 5 is the ATC curve because it is the U-shaped curve that passes through the lowest points of the AVC and AFC curves.

Curve 4 is the MC curve because it intersects the ATC and AVC curves at their respective minimum points.

Curve 6 is the AVC curve because it is the U-shaped curve that lies entirely above the AFC curve.

Curve 7 is the AFC curve because it continuously decreases as output increases, approaching zero as output approaches infinity.

The Diagram Below Shows Some Short- Run Cost Curves for a Firm