Choose correct statements from the following with reference to short-run cost curves:
(A) AVC and AC curves are 'U'-shaped.
(B) SMC curve cuts the AVC curve from below at the minimum point of AVC.
(C) AVC curve cuts the SMC curve from below at the minimum point of SMC.
(D) SMC curve is 'U' -shaped.
Choose the correct answer from the options given below:
Choose correct statements from the following with reference to short-run cost curves:
(A) AVC and AC curves are 'U'-shaped.
(B) SMC curve cuts the AVC curve from below at the minimum point of AVC.
(C) AVC curve cuts the SMC curve from below at the minimum point of SMC.
(D) SMC curve is 'U' -shaped.
Choose the correct answer from the options given below:
Solution
Due to the law of variable proportions, SMC, AVC and AC are all U-shaped in the short run, so (A) and (D) are correct. The SMC curve cuts the AVC curve from below at the minimum point of AVC, so (B) is correct. Statement (C) reverses this relationship: it is SMC that intersects AVC at AVC's minimum, not AVC cutting SMC at SMC's minimum. Hence (A), (B) and (D) only.
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