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?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 17P

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