Page 5 - HA-COST

1) MC is addition to TVC when one more unit of output is produced.
2) TVC can be obtained as summation of MC’s of all the units produced.
3) If the output is assumed to be perfectly divisible, then total area under the MC curve

will be equal to TVC.

ASSESSMENT

1. AC=MC only when______

(a) AC isincreasing
(b) AC is at its minimum
(c) AC is decreasing
(d) None of the above

Ans-(b)
2. When MC is less than AVC,AVC _______ with increase in output.
(a) Falls

(b) Rises
(c) Constant
(d) At its minimum

Ans-(a)
3. ________curves cuts the AVC and Ac curve at its minimum.
(a) AFC

(b) TVC
(c) ATC
(d) MC
Ans-(d)

4. ________ can be obtained as summation of MC of all the units of output.
(a) TC

(b) AVC
(c) TVC
(d) AFC
Ans-(c )

5. When TC rises at diminishing MC is _______
(a) rises
(b) At its minimum

(c)Falls
(d)constant
Ans-(b)

ASSIGNMENT
(1 MARK QUESTIONS)
1. What is the area below the MC curve?

2. When AC and AVC both increases , what will be the shape of MC?
3. Why does MC curve does not affected by fixed cost?
4. What is the reason behind the u-shaped curve of AC,AVC and MC?