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Production And Costs

Question

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At which point does the SMC curve cut the SAC curve? Give reason in support of your answer.

Solution

SMC (i.e. MC) curve custs SAC (i.e. AC) curve from below at minimum point of AC curve show in Fig. As long as SAC is falling, SMC is less than SAC and when SAC is rising, SMC is greater than SAC. So SMC curve cuts SAC curve from below at its minimum point.

Some More Questions From Production And Costs Chapter

What effect does an increase in input price have on supply curve?

What effect does an increase in excise tax have on supply curve of product?

If a farmer grows rice and wheat, how will an increase in price of wheat affect supply curve of rice?

What is meant by market period?

How will an increase in number of firms shifts the market supply curve?

What is the shape of supply curve during very short (market period)?

What is the shape of supply curve during short or long period?

What is the price elasticity associated with a straight line supply curve passing through the origin?

Name three factors that can shift a supply curve.

Give two examples where technological progress leads to a shift in the supply curve.

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