How do the short run average cost, short run marginal cost and average variable cost curves look like?
When AC falls, MC falls faster than AC. Then the MC remains below AC curve.
When AC rises, MC rises faster than AC. Then the MC curve is above AC curve.
As MC falls faster than AC, it reaches its lowest point earlier than AC. Then the MC starts increasing even when AC is declining.
MC curve both AC and AVC at their lowest points.
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