Which of the following most accurately describes the relationship between marginal cost (MC), average variable cost (AVC), marginal product (MP), and average product (AP)? A) When MP < AP, MC < AVC. B) When MP > AP, MC > AVC. C) When MP = AP, MC = AVC. D) When MP = AP, MC > AVC.
It must be C. and: ~ if MP>AP, then MCAVC.
am not that good at economics i admit… hmm i think when MP exceeds AP then MC is less then AVC & vice versa…from the curves as i recall… so that elminates A & B…& also D! so it must be C as alix12 said
let me try… when AP is highest, AVC is lowest… MP= AP when AP is highest and MC= AVC when AVC is lowest… so when MP=AP, MC=AVC…
Can someone explain this concept? Or just direct me to where it is in the text book. Thanks in advance
CFAI Book 2, look for reading on MP and MC… i guess session 4. I dont remember exactly and dont have the books in office…
SS4, in Outputs and Costs, Reading 17, starts at page 121 in Volume 2 of the 2008 CFAi Level 1 text
Increasing inflation expectations lead to higher money wage rates, which causes a decrease in short-run aggregate supply (SAS curve shifts to the left). Higher expected inflation will also encourage consumers to make purchases sooner than they otherwise would have, which increases aggregate demand (shifts the AD curve to the right). B is the answer.
ditch, I don’t see how the explanation fits the answer
Me neither. I was hoping someone could clarify.