Question

Assertion (A): When the Average Cost is constant, the AC curve is at its minimum point.

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

Options

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

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

• Assertion (A) is true, but Reason (R) is false.

• Assertion (A) is false, but Reason (R) is true.

Answer 1

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

Explanation:

The MC curve cuts the AC curve, hence MC = AC. And at this point, the average cost is stable and at its lowest point.