CFA Practice Question
Which of the following statements is TRUE in the short run?
A. The marginal cost curve intersects the average fixed cost curve at its minimum point.
B. The average variable cost curve intersects the average total cost curve at its minimum point.
C. The rising part of the marginal cost curve intersects the average total cost curve at its minimum point.
Explanation: The marginal cost curve's rising portion intersects the average total and average variable cost curves at their minimum points. This is because when the marginal cost curve is below the average cost curve, the average cost is still falling (as output increases).
User Contributed Comments 4
| User | Comment |
|---|---|
| eddeb | A : MC does not intersect AFC at its minimum. In fact, MC intersects ATC at its minimum. B : AVC cannot intersect ATC, its part of it... C : right one. See graph in LOS. |
| Kuki | thank you eddeb |
| thebkr7 | Wish they had the LOS attached like in the practice questions |
| gyee2012 | @thebkr7 - I wish they did that aswell so you would not be jumping chapter to chapter finding the material information. |