amount of overhead (fixed factor) is spread over an increasing number of
units of output. And the AVC curve is U-shaped for the reasons we have
just seen regarding the relationship between AP and AVC. It follows that
the ATC curve begins to rise (after reaching its minimum) only when the
effect of the increasing AVC dominates the effect of the declining AFC
therefore see the ATC curve reaching its minimum at a level of output
above where AVC reaches its minimum.
sean pound
(Sean Pound)
#1