Management Notes

Reference Notes for Management

Cost Curves – Different Types of Cost Curves | Theories of Production and Cost

Cost Curves | Different Types of Cost Curves | Theories of Production and Cost

Cost Curves are defined as the graph of the costs of production as a function of total quantity produced. In order to find out the optimal point which is the condition when costs are minimized and profits are maximized, the productively efficient firms use these curves to decide the quantity of output in market economy. We can find cost curves of various types that are all related to each other.  

Types of Cost Curves

The various types of Cost Curves that can be found areas follows:

  • Short Run Average Variable Cost Curve (SRAVC)
  • Short Run Average Total Cost Curve(SRATC or SRAC)
  • Long Run Average Cost Curve (LRAC)
  • Short Run Marginal Cost Curve (SRMC)
  • Long Run Marginal Cost Curve (LRMC)

Cost Curves MCQs


Which of the below graphs represent the cost curves for an informational product?

Which of the following is not a property of a firm’s cost curves?

a. Marginal cost must eventually rise as a result of diminishing marginal product.
b. Average total cost is U-shaped.
c. Economies of scale will exist when average total cost falls as output rises.
d. Average total cost will cross marginal cost at the minimum of marginal cost.

Which of the graphs represents the correct relationship among the cost curves?

a. Graph A
b. Graph B
c. Graph C

Given the cost curves in the diagram, what market situation would you expect to occur?

Which of the following is correct as it relates to cost curves?

Which of the following are likely to cause a shift of the cost curves

Which of the following denotes the typical shape of the monopolist’s total cost curve?

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