- Messages
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- Points
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AVC is kind of a supply curve, that is the part above the mc=avc. And the firm will only produce upto the output where mr=avc. If avc rises above that than the company has to close down the production.
For the profit part I said that AVC+AFC=ATC which can then be used to determine the profitability of the business. I had no idea what to write :/
AVC curve is same as AC i.e U shape and its below AC... and the gap b/w AVC and ATC is AFC!