Economics A Level: What happens when
1. MC is LOWER than AC
2. MC is HIGHER than AC
3. MC INTERSECTS with AC

Question

What happens when 
1. MC is LOWER than AC
2. MC is HIGHER than AC
3. MC INTERSECTS with AC

go kys · Accepted Answer

1. The Average Cost will be Falling as each Unit made is Less than the Average, thus it falls
2. Same story as1, but because it’s Higher than Average Price it Pushes up AC
3. MC meets AC when AC is at the Lowest Average Cost - Point of Productive Efficiency

Economics A Level

What happens when 1. MC is LOWER than AC 2. MC is HIGHER than AC 3. MC INTERSECTS with AC

1. The Average Cost will be Falling as each Unit made is Less than the Average, thus it falls 2. Same story as1, but because it’s Higher than Average Price it Pushes up AC 3. MC meets AC when AC is at the Lowest Average Cost - Point of Productive Efficiency

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