Point F indicates _____?A) where the cost per unit is at a minimum;B) where the AVC is at a minimum;C) where the ATC is at a minimum;D) where the MC is maximum;E) none ### Figure: Short-Run CostsThis graph illustrates the short-run cost curves typically encountered in microeconomics. The vertical axis represents cost in dollars, while the horizontal axis represents the quantity of output produced per day.#### Key Components of the Graph:1. **Cost Curves:** - Three primary cost curves are depicted: - **Curve A** represents the average total cost (ATC). - **Curve B** represents the marginal cost (MC). - **Curve C** represents the average variable cost (AVC).2. **Intersection Points:** - **Point D** indicates where the marginal cost curve (B) intersects the average variable cost curve (C). - **Point E** shows where the marginal cost curve (B) intersects the average total cost curve (A). This point is significant because typically, the marginal cost intersects the average total cost at the minimum point of the ATC.3. **Behavior of Curves:** - **Curve A (ATC)** initially decreases, reaches a minimum, and then starts to rise. - **Curve B (MC)** typically decreases to a point, then starts increasing, reflecting the law of diminishing returns. - **Curve C (AVC)** follows a pattern similar to ATC but starts rising sooner.4. **Cost Figures:** - Costs are marked on the vertical axis, ranging from $0 to $200. - Output quantities range from 0 to 11 units per day on the horizontal axis.5. **Other Points:** - **Point F** is near the intersection of the AVC with the vertical axis, indicating the start of production costs.This graphical representation aids students in understanding how costs behave in the short run and provides a visual tool to analyze cost structures involved in production decisions. It highlights critical economic concepts such as economies of scale, the behavior of marginal costs, and the point at which average costs are minimized.

The graph in the question shows cost curves where curve ending with point A is Marginal cost (MC)…

Answered: Point F indicates _____? A) where the…

Point F indicates _____? A) where the cost per unit is at a minimum; B) where the AVC is at a minimum; C) where the ATC is at a minimum; D) where the MC is maximum; E) none

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Point F indicates _____?

A) where the cost per unit is at a minimum;
B) where the AVC is at a minimum;
C) where the ATC is at a minimum;
D) where the MC is maximum;
E) none

### Figure: Short-Run Costs

This graph illustrates the short-run cost curves typically encountered in microeconomics. The vertical axis represents cost in dollars, while the horizontal axis represents the quantity of output produced per day.

#### Key Components of the Graph:

1. **Cost Curves:**
- Three primary cost curves are depicted:
- **Curve A** represents the average total cost (ATC).
- **Curve B** represents the marginal cost (MC).
- **Curve C** represents the average variable cost (AVC).

2. **Intersection Points:**
- **Point D** indicates where the marginal cost curve (B) intersects the average variable cost curve (C).
- **Point E** shows where the marginal cost curve (B) intersects the average total cost curve (A). This point is significant because typically, the marginal cost intersects the average total cost at the minimum point of the ATC.

3. **Behavior of Curves:**
- **Curve A (ATC)** initially decreases, reaches a minimum, and then starts to rise.
- **Curve B (MC)** typically decreases to a point, then starts increasing, reflecting the law of diminishing returns.
- **Curve C (AVC)** follows a pattern similar to ATC but starts rising sooner.

4. **Cost Figures:**
- Costs are marked on the vertical axis, ranging from $0 to $200.
- Output quantities range from 0 to 11 units per day on the horizontal axis.

5. **Other Points:**
- **Point F** is near the intersection of the AVC with the vertical axis, indicating the start of production costs.

This graphical representation aids students in understanding how costs behave in the short run and provides a visual tool to analyze cost structures involved in production decisions. It highlights critical economic concepts such as economies of scale, the behavior of marginal costs, and the point at which average costs are minimized.

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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