Question

Which statement is correct (select all that apply)? Select one or more: a. When MC is...

Which statement is correct (select all that apply)?

Select one or more:
a. When MC is lower than AC, AC curve has negative slope
b. TVC=AC*q-TFC
c. avoidable costs are always variable
d. AFC=AC-TVC/q
e. ТС=ТFC-AVC*q
f. MC(Q)=dAC/dQ
g. When MC is lower than TVC, TVC curve has negative slope
h. the distance between AC and AVC is always equal to AFC
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Answer #1

When MC is lower than AC, AC curve has negative slope. TVC=AC*q-TFC as AC*q = TC and TVC= TC-TFC. AFC=AC-TVC/q as TVC/q=AVC and AFC=AC-AVC. The distance between AC and AVC is always equal to AFC. Here statements a,b,d and h are correct. For other statements-avoidable costs are not always variable as certain fixed cost are avoidable, ТС=ТFC+AVC*q, MC(Q)=dTC/dQ, When MC is lower than TVC, TVC curve does not have a negative slope as TVC curve is positively sloped. Hence the answer are options- a,b,d and h.

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