Page 2 - HA-COST

4) Thereafter, both AC and MC rise, but MC increases at a faster rate as compared to
AC. As a result, MC curve is steeper as compared to AC curve.

2. AVC & MC

1) When MC is less than AVC, AVC falls with increase in the output, i.e. till 2 units of
output.
2) When MC is equal to AVC, i.e. when MC and AVC curves intersect each other at
rd
point B, AVC is constant and at its minimum point (at 3 unit of output).
3) When MC is more than AVC, AVC rises with increase in output, i.e. from 4 units of
output.
4) Thereafter, both AVC and MC rise, but MC increases at a faster rate as compared to
AVC. As a result, MC curve is steeper as compared to AVC curve.

3. AC, AVC & MC

1) When MC is less than AC and AVC, both of them fall with increase in the output.
2) When MC becomes equal to AC and AVC, they become constant. MC curve cuts AC

curve and AVC curve at their minimum points.
3) When MC is more than AC and AVC, both rise with increase in output.