GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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All the following curves are U-shaped except
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AC curve
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MC curve
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AFC curve
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AVC curve
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Explanation:
Detailed explanation-1: -All the following curves are U-shaped except AFC. The AFC curve is a rectangular hyperbola in the sense that all rectangles formed by AFC are of equal sizes. The AFC curve is asymptotic to both the axes. This means that it touches neither the horizontal axis nor the vertical axis.
Detailed explanation-2: -The Marginal Cost curve is U shaped because initially when a firm increases its output, total costs, as well as variable costs, start to increase at a diminishing rate. Then as output rises, the marginal cost increases.
Detailed explanation-3: -Shape of the AFC curve is a rectangular hyperbola.
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