Question

If average variable cost (AVC) curve is an upward sloping straight line through the origin, then the marginal cost curve will be ............

• A. upward sloping straight line through the origin and steeper than the AVC curve
• B. upward sloping straight line through the origin and flatter than the AVC curve
• C. usual “U-shaped” curve
• D. upward sloping straight line having a positive vertical intercept

Hint:

The marginal cost curve always intersects the average variable cost curve at its minimum point. When AVC is a straight line, the MC curve is also straight and steeper.

Answer 1

The Correct Option is A

Step 1: Understand the relationship between AVC and MC.
The average variable cost (AVC) curve and marginal cost (MC) curve are related. The marginal cost curve intersects the AVC curve at its minimum point. When the AVC curve is a straight line, the marginal cost curve will also be a straight line, but steeper.
Step 2: Analyze the options.
- Option (A) is correct because when the AVC curve is an upward sloping straight line through the origin, the MC curve is also a straight line passing through the origin, and it is steeper than the AVC curve.
- Option (B) is incorrect because the MC curve would not be flatter than the AVC curve in this case.
- Option (C) is incorrect because a "U-shaped" curve for MC occurs when there are diminishing returns, which is not the case here.
- Option (D) is incorrect because the MC curve does not have a positive vertical intercept when AVC passes through the origin.
Final Answer: \[ \boxed{\text{upward sloping straight line through the origin and steeper than the AVC curve}} \]