Question

Assertion (A): When average cost is constant, AC curve is at its minimum point.

Reason (R): At this point, MC curve cuts AC curve, which implies MC = AC.

Options

• Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation for Assertion (A).

• Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation for Assertion (A).

• Assertion (A) is true and Reason (R) is false.

• Both Assertion (A) and Reason (R) are false.

Answer 1

Both Assertion (A) and Reason (R) are true, and Reason (R) is the correct explanation for Assertion (A).

Explanation:

When the Average Cost (AC) is at its minimum point, it is neither rising nor falling, meaning it is momentarily constant (Slope = 0). At this exact minimum point, the Marginal Cost (MC) equals AC (MC = AC), which is why the rising MC curve intersects the AC curve from below at its lowest point.