In the short run and long run, the shapes of the cost curves for a typical firm are defined as

(A). SMC curve cuts the AVC curve from below at its minimum point.

(B). LRAC curve cuts the LRMC curve from below at the minimum point of LRMC.

(C). SMC curve cuts the SAC curve from below at the minimum point of SAC.

(D). Average fixed cost curve is downward sloping.

Choose the correct answer from the options given below:

(A). SMC curve cuts the AVC curve from below at its minimum point -> This is correct. The marginal cost curve intersects average variable cost at its minimum point from below, following the MC-AVC relationship.

(B). LRAC curve cuts the LRMC curve from below at the minimum point of LRMC -> This is incorrect. Actually, LRMC cuts LRAC from below at the minimum point of LRAC, not the other way around.

(C). SMC curve cuts the SAC curve from below at the minimum point of SAC -> This is correct. The short-run marginal cost intersects short-run average cost at its minimum point from below.

(D). Average fixed cost curve is downward sloping -> This is correct. AFC continuously declines as output increases since fixed costs are spread over more units.

Hence, Option 1: (A), (C) and (D) only -> Statements A, C, and D accurately describe cost curve relationships. Statement B is incorrect because it reverses the relationship between LRAC and LRMC. The correct relationship is that LRMC cuts LRAC from below at LRAC's minimum point, not at LRMC's minimum point. The marginal cost curve always intersects average cost curves (whether variable or total) at their minimum points from below, and AFC always slopes downward due to the spreading effect of fixed costs -> correct