Is there a case where the marginal cost curve doesn intersect the average variable cost curve?

Question

Is there a case where the marginal cost curve doesn intersect the average variable cost curve?

April 26, 2017average Case COST curve Economics intersect Marginal social

1 Answer

score 0 · Answer 1 · 2010-10-28T12:35:42+00:00

The marginal cost curve cuts the average variable cost curve at the minimm point of the latter. When you add a smaller number to an average, the average falls (when MCAVC, AVC rises) Hence, the only condition for MC never to meet AVC is that AVC continues to fall. In naturla monopolies, the AC keeps falling as the huge fixed costs are spread over larger output. In such cases, often the AVC also keeps falling, or at least doesn’t rise. Think of adding an extra house to the exisitng electricity grid. The fixed costs is the cost of the grid, the variale is the extra setup, wich does not increase. Hence I’d say yes, it is possible, if AVC keeps falling, and that would happen say in case of some natural monopolies.

Is there a case where the marginal cost curve doesn intersect the average variable cost curve?

1 Answer

Related Questions

Social

Questions

Links

Subscribe for updates