Question

Answer the following question:
(i) Why does AFC curve never touch the X-axis ?
(ii) Why does TVC curve start from origin?
(iii) Why AC, AVC and MC curves are U-shaped ?
(iv) Why are the gap between TC curve and TVC curve remains constant with rise in output ?
(v) Why does AC curve lie above the AVC curve ?
(vi) Why does TC curve and TFC curve start from the same point above the origin?

Answer 1

(i) AFC curve never touches the X-axis as TFC can never be zero.
(ii) `TVC` curve starts from origin because TVC is zero at level of output.
AC, AVC and MC curves are U-shaped because of Law of Variable Propertions.
(iv) The gap between them is TFC, which remains same with rise in output.
(v) AC curve lies above the AVC curve because both AVC and AFC at all levels of output.
(vi) It happen because both TC and TFC are same at zero level of output.