ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The marginal cost curve always intersects the average total cost curve at its lowest point because the marginal cost of making the next unit of output will always affect the average total cost. As a result, so long as marginal cost is less than average total cost, average total cost will fall.

Detailed explanation-2: -(ii) MC curve cuts the MR curve from below. When MR > MC, then producer will continue to produce as long as MR becomes equal to MC. It is so because firm will find it profitable to raise the output level. When MR < MC, then producer will cut down the production as long as MR becomes equal to MC.

Detailed explanation-3: -AC is greater than MC, so long as AC is falling. Q. The MC curve can intersect the MR curve at number of points.

Detailed explanation-4: -A manager maximizes profit when the value of the last unit of product (marginal revenue) equals the cost of producing the last unit of production (marginal cost). Maximum profit is the level of output where MC equals MR.