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15. Explain the following: a) Why would a U-shaped Average Cost (AC) curve result from a Total Cost curve TC = f(Q), where TC is initially concave and then convex. Assume that f(0) = 0. b) Why would the marginal cost (MC) curve intersect the U-shaped AC curve from below at the minimum point of AC, i.e., the MC curve lies below AC to the left of the minimum point on AC and MC lies above AC to the right of the minimum point on AC?

15. Explain the following: a) Why would a U-shaped Average Cost (AC) curve result from a Total Cost curve TC = f(Q), where TC is initially concave and then convex. Assume that f(0) = 0. b) Why would the marginal cost (MC) curve intersect the U-shaped AC curve from below at the minimum point of AC, i.e., the MC curve lies below AC to the left of the minimum point on AC and MC lies above AC to the right of the minimum point on AC?

ECON MICRO
ECON MICRO
5th Edition
ISBN:9781337000536
Author:William A. McEachern
Publisher:William A. McEachern
Chapter7: Production And Cost In The Firm
Section: Chapter Questions
Problem 3.9P
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15. Explain the following: a) Why would a U-shaped Average Cost (AC) curve result from a Total Cost curve TC = f(Q), where TC is initially concave and then convex. Assume that f(0) = 0. b) Why would the marginal cost (MC) curve intersect the U-shaped AC curve from below at the minimum point of AC, i.e., the MC curve lies below AC to the left of the minimum point on AC and MC lies above AC to the right of the minimum point on AC?
Transcribed Image Text:15. Explain the following: a) Why would a U-shaped Average Cost (AC) curve result from a Total Cost curve TC = f(Q), where TC is initially concave and then convex. Assume that f(0) = 0. b) Why would the marginal cost (MC) curve intersect the U-shaped AC curve from below at the minimum point of AC, i.e., the MC curve lies below AC to the left of the minimum point on AC and MC lies above AC to the right of the minimum point on AC?
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